Seller Costs:

Brokerage Fees:  If Seller is utilizing a broker, typical brokerage fees are 4-6% of the gross sales price.  If Seller is also buying a new home through the same broker then Seller may be able to negotiate a fee on the low end of the scale.  If Buyer has its own broker then the Seller will split the above fee with the Buyer’s broker.  The brokerage fee is paid at the Closing by the Seller.

Transfer Taxes:  If the house is located in the City of New York, NYC charges a transfer tax of 1% of the gross sales price for houses selling for $500,000 and under and 1.425% for transfers where the gross sales prices is over $500,000.  NYS charges a transfer tax for all houses sold in New York State.  The tax is $4 multiplied by each $1,000 of gross sales price.

Bank Charges:  If Seller has a loan to repay, then Seller should expect to pay the outstanding balance of the loan from sale proceeds at closing plus interest calculated per day from the first of the month through usually a day or two after the closing (to give time for the check to get to the lender). 

Adjustments: At closing real estate taxes for the house and any rental due from tenants remaining in possession will be adjusted between Seller and Buyer.  These items are adjusted based on the number of days the item covers and which of Buyer or Seller will be in occupancy during which of those days. 

Legal Fees:  Seller’s counsel typically charge fees ranging from $1,600 to $2,500.

Property Condition Waiver Fee:  Under New York law a Seller must either complete a detailed property condition report for the Buyer or else pay the Buyer a $500 fee.  Most Sellers opt to simply pay the fee.

Utility Accounts:  Although not in the nature of closing costs, Seller should arrange to close its accounts with all utility companies as of the date of delivery of possession of the house and provide the name and contact information for the Buyer.

Buyer Costs:

Bank Charges:  If Buyer is financing a portion of the purchase price then the Bank will have several charges which can vary widely depending on the bank and structure of the loan.  Such fees may include an application fee ($250-$500), a credit check fee ($50-$100), an appraisal fee ($350-$500), a processing fee ($300-$400), lender’s counsel fee ($600-$1,000), so-called points or buy-downs of the interest rate (check with lender if these types of fees apply).  The Bank will also charge short-term interest (i.e. the interest due on the loan from the date of closing to the last day of the month).  Finally, the bank may require that the Buyer escrow for real estate taxes with the bank or prepay upcoming real estates which will be due soon after the closing.

Adjustments:  At closing real estate taxes for the house and any rental due from tenants remaining in possession after closing will be adjusted between Seller and Buyer.  These items are adjusted based on the number of days the item covers and which of Buyer or Seller will be in occupancy during which of those days. 

Legal Fees:  Buyer’s counsel typically charge fees ranging from $1,600 to $2,500.

Title Charges: Buyer’s counsel orders the title report, survey and other searches through a title company.  New York is a “filed rate” state which means that all title companies must charge the same rate for title searches and premiums.  Title premiums vary depending on the purchase price and whether a mortgage is involved but the Buyer is generally safe to assume that the cost of title insurance will be between $3.50/thousand and $4.25/thousand, which varies depending on the purchase price and amount of the mortgage.  In addition, a new survey may cost up to $2,000 but if there is an existing survey which can be updated then the cost to update an existing survey may cost approximately $500.  The title company also typically charges about $500-$600 for searches and recording charges.  Finally, it is customary to give a gratuity to the individual representing the title company at the closing (unless the closer charges an “attendance fee”).  The amount of the gratuity ranges from $100-$200, depending on the size of the transaction, the length of the closing and the helpfulness of the title closer.

Taxes: If the Buyer is obtaining a mortgage loan, then New York State charges a mortgage recording tax, which varies depending on where the house is located.  In New York City, the fee is 2.05% of the amount of the mortgage (under $500,000) and 2.175% of the amount of the mortgage ($500,000 and higher). The fees in the outlying counties vary, depending upon the local regulations, with a minimum of 1% of the amount of the mortgage. This "tax" is not tax- deductible.  Generally the lender is required to pay a quarter point of the fee (.25%) leaving the Buyer to pay 1.80% (under $500,000), or 1.925% ($500,000 or higher) in New York City.  If the purchase price is $1,000,000.00 or higher the Buyer is also required to pay to New York State a so called mansion tax equal to 1% of the purchase price.  Other New York State and New York City transfer taxes are typically the responsibility of the Seller.  In rare cases for new houses in a new development, this cost is passed on to the Buyer.   See Transfer Taxes under Seller Closing Costs above if the Buyer will be required to pay these taxes.

Homeowners Insurance: The first year’s premium for homeowners insurance is typically paid in advance by the Buyer.  Premiums vary based on the amount of insurance.

Fuel Oil:  If the home is heated by oil, then the Seller will fill the oil tank and obtain a statement from the fuel oil company regarding the value of the fuel in the tank based on then current prices for fuel oil.  The Buyer will reimburse the Seller for this amount at the closing.

Utility Accounts:  Although not in the nature of closing costs, Buyer should arrange to open new accounts with all utility companies as of the date of delivery of possession of the house.

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The following is meant to be a representative timeline for closing a house purchase or sale.  Each transaction is different and a variety of factors may affect the overall closing timeline for each individual transaction.


Major Activity


Purchase offer accepted by Seller


Buyer arranges and conducts home inspection (with termite and radon inspection) and obtains report.


Seller’s broker prepares and distributes a “set up” sheet which has the names and contact information for Seller and Buyer as well as the attorneys and brokers for each side.  The set-up sheet also includes the purchase price, annual real estate taxes for the house, agreed to estimated closing date and amount to be financed by the Buyer.  If there is no broker, then the Seller and Buyer are responsible for making sure that attorneys are contacted and have all necessary information on the transaction.


Seller’s attorney drafts contract and sends to Buyer’s attorney for review.


Buyer’s attorney works with Seller’s attorney to resolve any disagreements in the proposed contract of sale.


Contract is signed by Buyer and returned to Seller’s attorney with a contract deposit of 10% of the purchase price to be held in escrow.


Seller and Seller’s attorney (as escrow agent) sign contract and return at least one original to the Buyer’s attorney.

10-15 Once the contract is fully executed, Buyer applies for a loan for the portion of the purchase to be financed.  (Typically, Buyer has already made contact with a lender long before the contract is signed or the unit for purchase is even identified.  This is highly recommended.)

Once the contract is fully executed, Buyer’s attorney orders the title report and survey covering the property which also includes searches on the Seller and Buyer for liens and judgments.  Buyer’s attorney arranges for the Seller and lender attorneys to obtain a copy of the title report when it is completed.

10-30 If Seller has a loan on the house, Seller should contact its lender to obtain a pay-off letter.  The lender will need to know the estimated closing date and Seller should feel free to use the estimated date set forth in the contract, although the actual closing date may vary. 
20-45 Buyer obtains a loan commitment.  Buyer’s are advised to make sure that, if a loan commitment is delayed, their rights under any mortgage contingency clause are not inadvertently waived by the failure to extend the timing in the contract for obtaining a mortgage loan.  The Buyer should check with his attorney for more information.  Once received, the Buyer should review and then sign and return the loan commitment to the bank and satisfy any additional documentation or other requirements that are listed in the commitment to be satisfied prior to closing.  This is important since the bank will not schedule a closing until all such information has been received.  So the Buyer should pay close attention to these matters until Buyer has received a “clear to close” from its lender.
45-60 A clear to close” from the Buyer’s lender should be obtained within this time frame.  Buyer and Seller’s attorney should be notified so that the closing can be scheduled within this time period.
Before the Closing:

Buyer does a walk-through of the house after the Seller vacates the house to be sure that the house is in the condition required by the contract of sale.  The Buyer’s broker typically arranges for the walk-through and accompanies the Buyer on the walk-through.

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I have an accepted offer. What is the next step?
It is strongly recommended that the Buyer hire an experienced home inspector to visit the house and inspect all physical conditions of the structure and the building systems as well as the exterior to determine necessary repairs and replacements.  The inspections should also include a termite inspection and a radon gas inspection in the basement. 

Usually these inspections are conducted before the parties go to contract, but in some cases the parties decide to enter into the contract first, and the contract contains a “contingency clause” giving the Buyer the right to terminate the contract if Buyer is dissatisfied with the results of the house inspection (including a termite and radon gas inspection).  We recommend that the home inspection be performed before signing the contract to avoid the incurrence of legal fees and the placing of a large downpayment prior to reviewing the condition of the house. 

A few words to the wise: Buyer should not request that the broker recommend a home inspector.  The Buyer should find one on his own.  Second, the Buyer should accompany the home inspector on the inspection- it is likely to be much more thorough if the Buyer is there when the inspection is held and the Buyer will learn a lot more about the house.  Also, if the Buyer is present during the home inspection it is possible that Buyer will notice things and ask the inspector about them.  None of the Buyer’s broker, the Seller’s broker or the Seller, should accompany the home inspector on the walk-through, although it is acceptable for one of those parties to provide access to the house and remain on the premises during the inspection.  The Buyer should not allow the broker to get chatty with the home inspector or exchange business cards before or during the home inspection process. 

The home inspector should inspect all aspects of the house including the plumbing, heating, electrical, air conditioning, attic, foundation, roof, windows, kitchen and appliances, bathroom fixtures, floors and ceilings, staircases, joists, doors, etc.  Every room should be examined as well as the outside foundation walkways, driveway, sprinklers, pool (if applicable) and landscaping. 

Once the Buyer obtains the written home inspection report, if there is anything contained therein which the Buyer finds unacceptable then the Buyer can negotiate for the Seller to fix such items before Closing or provide a credit for the cost to repair such item by Buyer after the Closing.  If an existing home is being purchased the Buyer should know that the inspector will always find things that are not perfect so a Buyer really has to determine which items are in need of serious or immediate repair or for which the repair will carry a very significant cost.  Items not in need of immediate repair or for which the cost is not significant probably shouldn’t be part of the negotiation.  Each deal is different so a lot depends on the condition the house was represented to be in by the Seller or the broker before the Buyer made the offer or what the Buyer’s expectations were when it made the offer.  Was the Buyer told that the house was in “mint condition” or a “fixer upper”?  Did the Buyer think that the house was pristine and was going to be in move-in condition?  Is the Buyer’s budget very tight with not much room in the budget left to make repairs after Closing?  If the termite or radon inspection comes back positive, these are usually items that the Seller is expected to remedy prior to closing. 

The Buyer should remember that if Seller is required to make a repair (other than termite or radon) before Closing, a Seller may look for the most cost-effective repair possible, rather than the most long-lasting and complete.  So the contract should specify the exact nature of the repair.  If a credit is to be given at Closing, then the credit should be structured as a cash repair credit paid by Seller to Buyer at Closing, not a reduction in the purchase price if there is financing involved.  The reason is that if the purchase price is simply reduced the Buyer won’t see most of the credit in his pocket at Closing since the lender is financing a set percentage of the stated purchase price.  For example, if the Buyer is obtaining 75% financing and the Seller reduces the purchase price by $1,000, the lender will simply reduce its financing by $750, leaving the Buyer with only $250 after Closing to make a $1,000 repair. 

How do I arrange for a mortgage?
If the Buyer is planning to finance any portion of his purchase, he should check out ads in the newspapers for residential mortgage loans.  The Buyer can visit the residential loan websites of the major banks like JP Morgan Chase, Bank of America, and Wells Fargo.  If the Buyer wants more variety or has a special circumstance, then the Buyer should ask his broker or attorney to recommend a reputable mortgage broker who will have access to a wider variety of loan options.  Buyers should not go to a bank which is not well known or to a mortgage broker who has not come well recommended by someone the Buyer trusts.  There are many horror stories out there of high fees being charged and obscure lenders and brokers not coming through with a promised mortgage.

The Seller wants to see a mortgage pre-approval letter.  How do I obtain one?
A pre-approval letter is a letter from a lender that basically says how much of a loan the Buyer can afford and be approved for based on the annual income and financial standing of the Buyer.  It does not approve a specific home, since that will depend on obtaining an appraisal of the home.  But it gives Seller, Buyer and lender some comfort that the Buyer can actually afford and be able to obtain a loan of a certain dollar amount.  It is advisable for Seller to request a pre-approval letter from the Buyer if Seller has any doubt whether a prospective Buyer can actually obtain a loan.  It is also advisable for prospective Buyers to obtain such a pre-approval letter from a lender during the home search process in case Seller requests one or if there is any doubt in the Buyer’s mind about how high a mortgage the Buyer can afford. 

What if the Buyer can’t obtain a loan to close after entering into contract?
For the Buyer’s protection, we recommend that Buyers request a “mortgage contingency clause” if the Buyer plans to obtain a loan to finance a portion of the purchase price.  This is a clause placed into the contract that provides that the deal is subject to the Buyer obtaining a loan commitment from a lender in a specified dollar amount within a specified time after contract signing.  With this clause, if Buyer is unable to obtain a loan commitment within the period of time (typically, 30-45 days) then the Buyer has the right to terminate the contract and the downpayment will be returned to the Buyer without penalty.  In a Seller’s market (i.e. a market where prices are high and home inventory is low) or when there are multiple offers on the house, Sellers typically do not want this clause in the contract.  A Seller wants the Buyer to take the risk that the Buyer won’t be able to obtain a loan and will thus lose the downpayment to the Seller.  In a Buyer’s market (i.e. a market where prices are dropping or weak and inventory is high) or at time when the mortgage market is uncertain, these clauses are routinely included in the contract if the Buyer intends to finance the purchase.

When does the Buyer have to put money down and how much?
We do not recommend that Buyers put any money down until contract signing.  Some brokers try to get the Buyer to put some money down when the offer is made.  Such “binders’ are non-binding anyway and provide no real benefit to the Seller or the Buyer.  In New York, the use of so-called “binders” or “good faith deposits” is not commonly done, as it is elsewhere in the country.  Once the Buyer and Seller have agreed to a purchase price and the Buyer is signing the contract (which has been reviewed and approved by both Seller's and Buyer’s attorneys), then the Buyer will be required to give a personal check for 10% of the purchase price made payable to Seller’s attorney, as escrow agent, and which sum is credited to the purchase price at closing.  In unusual circumstances the downpayment can be negotiated to be lower than 10% (such as if the Buyer is getting more than 90% financing).  The contract is typically signed by the Buyer first and sent to Seller’s attorney with the downpayment check.  The Seller and his attorney (as escrow agent) then sign the contract and the check is deposited into the Seller attorney’s escrow account.  At least one original of the fully executed contract is then returned to Buyer’s attorney.  Even with an accepted offer, the deal is not binding on either side until both Buyer and Seller have signed and returned the contract to the other party.

Can the Buyer get his downpayment back if the deal doesn’t close?
Basically, if the deal is cancelled for any reason other than the Buyer’s default, the Buyer is entitled to the return of the downpayment.  So, as noted above, if the contract is contingent on the Buyer getting a loan and the loan commitment is not obtained, then the downpayment is returned to the Buyer.  If the situation gets complicated and Seller makes allegations of bad faith by the Buyer (such as that Buyer failed to use good faith efforts to try to get a mortgage), or the Buyer otherwise defaults under the contract, then the return of the downpayment may be in jeopardy.  But if there is any dispute as to who is entitled to the downpayment, the Seller’s attorney is not permitted to release the funds to either Seller or Buyer until authorized by both parties or a court involved in any litigation over the matter.  So, if a dispute arises, the Buyer’s downpayment should be safe in the escrow account until the dispute has been fully resolved.

Once a loan commitment is obtained, are we ready to close?
You are very close.  The mortgage commitment will often be conditioned on the Buyer signing and returning the commitment with whatever items are listed in the commitment that are then still outstanding.  Only then is the loan commitment binding.  Once Buyer sends the signed commitment back to the lender and supplies those outstanding items, the Buyer should call the lender and ask if the Buyer is “cleared to close”.  When Buyer obtains such clearance, the Buyer’s attorney can then arrange for the closing with the new lender and the Seller. 

As a Buyer, do I need a title search/insurance on the house?
Yes.  The Buyer’s attorney will order a title report which searches title to the house and also includes searches on the Seller and the Buyer.  Copies of the title report will also be sent to counsel to the Seller and the Buyer’s lender.  Buyer’s counsel should order the title report as soon as the contract is signed as it generally takes about two weeks to obtain and then must be reviewed for any issues which arise.  It is wise to obtain title insurance at the closing to insure that Buyer has received good legal title to the house.  Nearly all Buyers purchase title insurance and lenders require it.  This one time expense, set by statute, varies according to the purchase price of the home and the amount of the mortgage (if any).  With the title report the Buyer will also need a land survey of the property showing the exact legal boundaries and the location on the property of the house and other improvements.  If the Seller has an existing survey, it can usually be updated at lower cost than ordering a brand new survey.  The Buyer’s attorney will arrange for a new or updated survey at the same time that the title report is ordered.

As a Seller how do I payoff my existing loan?
Well before the closing the Seller should contact his lender at the number on the lender’s monthly billing statement to let the lender know that the house is being sold and ask for a “pay-off letter”.  Seller should be prepared to give the lender an estimated closing date (it doesn’t have to be exact).  The lender will generate and send Seller the payoff letter in a few days.  The existing lender is not present at the closing but the title company representative is present and uses that payoff letter to collect the sums needed to pay off the existing mortgage in order to deliver the Buyer clear title to the house free of the Seller’s existing mortgage.

When should the Buyer conduct the final inspection of the house prior to closing?
Before the closing the Seller must remove all of his possessions from the house and once that is done, the Buyer needs to carefully inspect the house to make sure it is in the condition required by the contract.  Typically, this means that the house should be broom clean, vacant and all appliances, plumbing fixtures, electrical and other systems are in working order and the house free of leaks.  However, the exact terms of the contract govern the required condition of the house prior to closing.  If Buyer notes anything amiss or anything significantly damaged, the Buyer should check with his attorney to see if he is entitled to a credit at closing for the damaged or non-working item.  If Buyer and Seller agreed in the contract that any particular item of furniture or personal property was to be included and it isn’t in the house at the time of final inspection, Buyer should mention that to his attorney before closing.  Also, Buyer should check to see if the Seller left the manuals and warranties for the appliances and other equipment in the house.  Sometimes the Seller cannot find such items.  If that’s the case, and the affected appliance is not new, the Buyer usually does not make a big issue of it.

Where is the closing held and what do I bring with me?
The closing is usually held at the office of the Seller’s attorney, but can be held somewhere else with the consent of Buyer and Seller.  Buyer and Seller will need to be present and have picture identification.  A driver’s license or passport usually serve as identification.  If any Seller or Buyer will not be present at the closing then a valid power of attorney will need to be prepared by such party’s attorney and signed and notarized prior to closing.  The balance of the purchase price with apportionments, fees and expenses will need to be paid by the Buyer at the closing (See Typical Transaction Costs for more information on Buyer’s apportionments, fees and expenses.).  The balance of the purchase price is paid as requested by Seller to Buyer’s attorney a few days before the closing.  For example, the Seller may wish that the Buyer direct part of the purchase price due from the Buyer to pay off the Seller’s existing mortgage or to pay the brokerage fees.  However Seller directs the Buyer to pay the balance of the purchase price due doesn’t really matter to the Buyer as it doesn’t change the amount due from Buyer, and all sums so paid by Buyer or its lender from loan proceeds will be a credit against the purchase price due regardless of how directed.  There are also a variety of fees for the Seller to pay (See Typical Transaction Costs for more information on apportionments, fees and expenses). Seller's and Buyer’s attorneys typically work together to determine what payments will be necessary for the closing and to whom such payments should be made.  Each of the attorneys will typically prepare for their client a preliminary closing statement a day or two before the closing and advise their client about the payees and amounts of any bank or certified checks which must be brought to the closing.  Both Seller and Buyer should also bring their checkbook for other fees and charges which can be paid by personal check at the closing.  Also, the Buyer should bring his mortgage commitment to the closing and any other items of correspondence or notes that Buyer feels may be important or relevant to any issue that may come up.  Seller should bring to Closing all keys to the house.

What if the Seller wants to remain in possession of the house for a period of time after the closing?
This is not an unusual circumstance but it does introduce some complications.  The attorneys can draft a possession provision into the contract or at the closing which outlines the specifics of how long the Seller can stay, how much the Seller will pay in rent and how much will be held in escrow by Seller’s attorney to insure that the Seller pays the sums due and vacates the house in good condition when the Seller leaves the house on the agreed date.  Obviously, if the Seller is staying in possession after the closing it may not be necessary for the Buyer to conduct a final inspection of the house prior to closing because the Seller is not yet out of occupancy.  The final inspection would be postponed until the date that Seller actually vacates.  But typically enough money is left in escrow with Seller’s attorney pending final delivery of possession to address any issues regarding the condition of the house when final delivery of possession occurs.

What if there are one or more tenants in the house who will be staying after the Closing?
If the sale is subject to any existing tenancies, then the leases should be attached to the contract and representations made by the Seller in the contract as to the amount of rent due monthly, whether the tenant is in good standing and the amount of any security deposit being held by the Seller under the lease.  The Buyer may also need to consider whether the contract should be contingent on the tenant remaining in occupancy under the lease and in good standing as of the closing.  For example, if the tenant were to vacate between contract signing and closing, would Buyer still want to be obligated to close?  At the closing, the lease and security deposit will be assigned to Buyer and the rent should be apportioned between Seller and Buyer for the month in which the closing occurs.  It is highly recommended that the Buyer meet with each tenant before contract signing to confirm the amount of the monthly rent due under the lease and any security deposit being held by Seller, and to learn whether there are any physical repair issues or other matters that concern the tenant.

As a Buyer do I need to obtain homeowners insurance?
Yes. The Buyer will need to obtain insurance to protect the house and the personal property in the house against fire or other catastrophe.  The lender will usually require that such insurance be obtained and that evidence of such insurance with the lender listed as additional insured and “loss payee” be provided at or prior to closing, along with proof of payment of the first year’s premium.  Lender will often require that the insurance be in a certain minimum amount but the Buyer is advised not to be penny-wise and pound foolish.  Buyer should work with its insurance agent to obtain sufficient insurance to rebuild the house and replace all belongings in it, even if the recommended amount is higher than what the lender requires to pay off the mortgage.  Buyer is also advised to revisit the amount of insurance from time to time during the period of ownership to increase insurance levels as replacement costs rise due to inflation or rising costs of construction of the house and other personal belongings in the house.

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