who pays closing costs
Seller's Closing Cost Obligations in New York
Closing costs are monies that must be paid to various entities to complete the sale of real estate, and they encompass a wide variety of payments such as attorney fees, prepayments to county and local taxes, mortgage recording taxes, and title insurance, among others, impacting who pays closing costs. Both buyers and sellers encounter closing costs during the home sale process. However, the division of responsibilities for who pays what is usually outlined in a contract between the buyer and seller, influencing who pays closing costs. While negotiations over who pays closing costs can occur, the general consensus is that the person buying the property bears the brunt of the closing costs, including who pays closing costs. In New York City, this dynamic is especially pronounced due to the presence of numerous unique and expensive charges that must be settled with the city and state, shaping who pays closing costs.
As a standard guideline, sellers in New York City and Manhattan are obliged to cover 2-5% of the purchase price in closing costs, impacting who pays closing costs. This percentage tends to be higher for condos, townhouses, homes exceeding $1 million, and new developments, all of which influence who pays closing costs. Notably, NYC closing costs encompass the Mansion Tax, a one-time tax ranging from 1% to 3.9%, the Mortgage Recording Tax which is a fixed 2% of the loan amount, and title insurance whose cost is linked to the property's price, contributing to who pays closing costs.
While it's a customary practice for buyers to request sellers to assume these closing costs, such appeals aren't always granted. In particular circumstances, it is wise for buyers to engage in negotiations concerning these expenses, especially in cases of new development or high-end home purchases, influencing who pays closing costs. Similarly, sellers are advised to carefully assess the closing costs alongside their attorney before committing to cover any of these expenses, central to determining who pays closing costs.
For buyers who find it challenging to evade closing costs, collaborating with a mortgage professional to secure an appraisal waiver can lead to substantial savings. This waiver eliminates the need for a comprehensive property appraisal, and consequently, the associated fee, affecting who pays closing costs. Employing such a strategy can prove highly beneficial in reducing the overall cost of purchasing a home in the vibrant landscape of NYC.
Seller's Closing Cost Obligations
In the context of New York, seller's closing costs primarily encompass listing and broker fees, the residential deed transfer fee, the NYS equalization fee, the UCC-3 filing fee, and the managing agent fee. These closing costs are the primary financial obligations that fall on the seller, though there may also be opportunities for negotiation, such as reaching a reduced broker's fee with the buyer's agent, influencing who pays closing costs.
Furthermore, apart from these fees, the seller's attorney will levy a charge for reviewing and crafting the contract of sale, and may be tasked with negotiating specific terms with the buyer's attorney, all considerations that impact who pays closing costs. Opting for an attorney charging a flat rate can sometimes eliminate the need for such negotiations. Generally, attorney fees hover around 3 percent of the final sales price, a crucial factor in the determination of who pays closing costs. Additional potential fees encompass transfer taxes and flip taxes, imposed by both NYC and the state, calculated as a percentage of the sales price, further shaping who pays closing costs.
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