In this video we're going to walk you through how to use the seller closing cost calculator available at
hauseit.com. So this is the interface of the calculator
If you're not already on this page to get here go to hauseit.com and in the toolbar click on calculators
cell and it'll be right here
There are also a couple other calculators if you're interested in doing a deeper dive on some of the closing costs for sellers in particular
we have the transfer tax calculator
the coop flip tax calculator as well as the coop tax deduction calculator
Going back to the seller closing cost calculator. The left side is where you're going to be putting your inputs
Obviously these three inputs have an impact on how big your seller closing costs bill is going to be
the most important consideration is the sale price in this case. We can start with a hypothetical example
we'll say you're selling a seven hundred and fifty thousand dollar coop in the East Village and
let us go ahead and click on co-op and we want to assume in this case. You probably have an existing mortgage
Your standard mortgage term of thirty years is much longer than your average hold period for an apartment in the city
So we're gonna go ahead and click on yes to existing mortgage
The breakdown of closing costs here is going to be on the right-hand side
And as you can see you're in for a bit of a shock ten percent is the estimated closing cost
bill for you
As a percentage of your sale price for a seven hundred and fifty thousand dollar co-op with an existing mortgage
now if we look at the
totals here, we're gonna see that the majority of the actual closing cost comes in the form of a broker Commission
It is pretty well
known that commissions here in New York City are not only some of the highest in the country
but also some of the highest in the world
Just by way of comparison. If you go to the UK if you go to London
Very similar city many people consider it to be a sister city of New York and over there
The commission is a little bit less than half
So you pay about three percent or less if you're selling an equivalent?
You know property in London whether it's an apartment or a townhouse
For a co-op since we've selected that we also have what's called the co-op flip tax
Now co-op flip taxes do vary by building
They are essentially an additional private seller closing costs that you have to pay at closing the difference
is that the money that you pay the
Coop goes directly into their coffers and they generally use it to you know
Pay for operating expenses of the building perhaps also to build their reserve fund
Because of the co-op flip tax it is fair to say that seller closing costs are going to be a little bit lower
for a condo or for a house compared to a co-op
We can prove that by just changing the input here under housing type
So let's pretend that you're selling a co-op if we click on that
Your closing costs are going down to about eight and a half percent
With a house just slightly under eight and a half percent
Compared to I would say over ten percent for a co-op
Now in terms of other closing costs here
The second and third largest components for most sums at transactions are the city and state transfer taxes
The new york city transfer tax is
in this case one point four to five percent
There is a lower tax bracket of one percent which we would expect to pay if the sale price
according to this chart is
less than or equal to five hundred thousand dollars, so
you can actually pull this up by going to the hauseit website or
google, for the houses article on transfer taxes
So if we look down here again New York City transfer tax rates are either one percent or one point four to five percent
So if we went back to the calculator and we put in five hundred thousand dollars
We would notice that the New York City transfer tax has gone down to one percent. If we
increase it to 500,000 and $1, we're back up to one point four to five percent
Going after the transfer taxes the city transfer taxes. We have been New York State transfer tax
This is customarily 0.4%
however, there is now as of 2019 a higher New York State transfer tax rate of
0.65 percent and as you can see that applies to sale prices
Greater than or equal to three million dollars
As far as other closing costs are concerned the rest of the ones you're going to find here are
essentially fixed costs so it doesn't matter really what the sale price is. The rest of these are going to be pretty much the same
Specifically your sellers attorney fee
It really doesn't matter whether you're selling a five hundred thousand dollar co-op or a two million dollar co-op on
average. The
sellers attorney your lawyer is going to charge you a fixed fee and it generally won't vary just because the property is more or less
expensive there are obviously exceptions to the rule if it's a special situation if it's an estate sale if there's something more complex
The sellers attorney may charge you a little bit more
The customary attorney fee in the city is anywhere from two to three thousand dollars
There are attorneys who will charge you less, there are attorneys who will charge you more. It is very important
however
when you pick an attorney that you make sure the lawyer is responsive a
good communicator easy to deal with and also thorough
It's quite common to see deals
essentially fall apart when two attorneys cannot see eye-to-eye. So think of an attorney as more than somebody who is
mitigating risk think of an attorney also as somebody who needs to be a good deal maker
One other note of caution
If you do find an attorney who's working for a very small amount of money
You just want to make sure that you're gonna get good service and they're going to be responsive
There is nothing binding about an accepted offer in New York City
So imagine you you're well into the sale process and you find a buyer and you and accepted offer
You come to find out that five days have passed and your attorney still hasn't sent the draft contract to the buyer
The buyer doesn't know that you've hired a discount lawyer. They're simply assuming that you've probably
accepted another offer or you're no longer interested in selling your home to them. So just make sure
regardless of which attorney you hire that they will be very very
responsive and that they'll promise you to send out the draft of the contract within a day or
maximum two days from the time that you have an accepted offer on your property
Essentially every condo or co-op is going to charge you a move-out fee
and/or deposit. They may also charge you
possibly a managing agent fee to coordinate the closing. If you have an existing mortgage, there are some fees you'll have to pay as well
directly to the bank they include
bank loans satisfaction fees, co-op attorney fees,
UCC three termination fee, non deed transfer fee and a co-op stock transfer tax
Lot of closing costs in this case the ones down here are pretty inexpensive
So just going back to the closing costs towards the top here, move out deposit move-out fee
Anything related to a building, you're obviously not gonna pay if you're selling a townhouse, there is no board
there is no managing agent. It's real property you own it. So if you click on house, you're gonna see the closing costs go down
quite a bit
I would say the better comparison is condo versus house not co-op versus house because of the fact that
co-op does usually have a flip tax. So if we do a condo we're at eight and a half
House were at a little over eight. So a very small difference
But of course you're paying a little less in seller closing costs
Going back to the coop just one important thing to note as it relates to the flip tax a
building can charge whatever flip tax it wants and a building can also
implement a flip tax after you've made a purchase
So even if you buy into a co-op that does not have a flip tax it is within their power. If the board
vote sit-in for them to implement a flip tax. A flip tax can either be a percentage of the sale price
It can be a percentage of the profits or it could be a per share amount. It would be a set dollar amount
Which you would multiply by the number of shares
assigned to your property. There may even be a possibility that the coop has some sort of hybrid formula between all three of those
mechanisms. The way to figure out your buildings flip tax if you're a seller is
to ask the managing agent. You could also check in the house rules or the bylaws and if the
flip tax has recently been implemented. You will surely have received some sort of
Announcement notification something for your reference that will tell you not only what the new flip tax is
But from when it takes effect, it is possible that a flip tax may only take effect at some point in the future
so if you're able to sign the sale contract prior to that date, you may qualify for the
previous presumably lower
flip tax rates
Another interesting thing for us to point out is
Possible savings you can obtain with regard to your transfer tax. Now. This comes into play if your purchaser is
Financing the deal and you have an existing mortgage if you have an existing mortgage
It is possible for you to actually assign some or all of your mortgage
to the purchaser now by doing this you reduce the amount of new loan size that has to be originated and
Whatever amount you transfer
Let's say you have a mortgage of 400,000 if you transfer that amount
You do not have to pay the New York State transfer tax of 0.4% on the amount you transfer
so think of that as possible savings, but in order for that to happen, the buyer also has to agree to
do this. It's called a purchase CEMA
CEMA
Now there are some savings that the buyer achieves by way of doing the purchase CEMA and they actually save more money than you as
the seller. The buyer does not have to pay the mortgage recording tax
which is well over a percent and a half on any amount of the
loan, which is transferred from you to them instead of
originated and created as a new mortgage. So essentially what normally happens is the seller saves
around 0.4% The buyer can possibly save I would say closer to 2%
But in order for this to happen buyer and seller have to agree
So as a seller you have a lot of leverage here
You're certainly not going to agree to it if they save more money than you so customarily the buyer and seller
agree to do the purchase CEMA and they usually agree to more or less split the savings between both parties
Other ways to save money on commission are
As follows, you could potentially you know list your home online for sale by owner
There's a couple of downsides to doing that the main downside of that is
Most buyers in the city have buyer brokers and these buyer brokers, they look for listings in the
broker database which in Manhattan, Brooklyn, Queens
In fact is called RLS possibly even and unless Long Island, depending on where you are in Queens
So if you list your property online FSBO the buyer agents don't see your listing and even if they do
They don't have that assurance as per the mls code of conduct and the agreements that broker sign that they'll receive a commission
So really you have very little demand if you try to list FSBO
Perhaps a better solution is to list via an agent assisted FSBO flat fee option that is available through hauseit with that
model you would as the seller manage the sale process you would negotiate show the property
work on the board package and you would just pay a small flat fee for the online advertising to be put in the
MLS as well as relevant websites online
So you would save up to 6% in commission if the buyer does not have an agent
The buyer has a buyer agent and you accept that offer. You would pay whatever commission you offer to buyer agents in the MLS
So assuming you do the agent assisted FSBO flat fee listing
option buyer comes direct without an agent your closing cost bill not be
10% it would be closer to 4%
Another option if you have less time and you're not able to dedicate it to running the sale process yourself
would be the 1% listing fee full service option available through hauseit as well
Under that model you would certainly be able to reduce the closing cost line item as it relates to
commission for brokers so a couple of ways to do it certainly think you should explore your options and
try to figure out ways to save because any amount of money that's taken away from your sale
through closing costs obviously dilutes the amount of money you're able to
reinvest into a new home
It also eliminates the possibility for you to invest any of that money in the stock market or other long term ways to
appreciate
capital generate your your net worth over time
We hope this was helpful
If you have any questions leave us a comment below the video and if there's anything we can do to create
more explainer videos if you have any other questions, we are happy to work on those. Just give us a shout