If the seller’s home needs work before being listed, those costs could increase substantially.
Here’s a breakdown of all the seller’s fees you might expect to incur:
Agent's Commission: This is the big-ticket item when it comes to selling your home. Although technically, this fee is somewhat negotiable, the standard sales commission is 6%. So if you are selling your home for $1 million, your agent will receive a commission of $60,000. If a buyer’s agent is involved, both agents will split this fee.
This hefty fee is why some sellers choose to sell their home themselves — known as an FSBO, For Sale By Owner — listing. However, aside from the logistical and technical aspects of selling a home (marketing, arranging showings, negotiations, and handling the transfer of the title, data shows that homes sold by agents sold for considerably more than the average FSBO listing. This doesn’t factor in the holding costs incurred while waiting for your home to sell.
Closing Costs: In a buyer’s market, when homes aren’t selling, a buyer might get a little cheeky and try to tack on some or all of their closing costs to the seller. However, that won’t apply to the current market.
Transfer Taxes: This is where New York City residents do a double-take of their settlement page because sellers have to pay transfer taxes to both New York City and New York State. In NYC, that’s 1% of the price if the value is $500,000 or less, or 1.425% if it is more. The NY State tax is an additional 0.40% on the sale’s price. This number increases to 0.65% for residential transactions greater than $3,000,000.
Attorney’s Fees: Expect to pay a flat fee for anywhere from $1,500 to $4,000 to your attorney upon the closing of the transaction.
Taxes: Although you won’t pay your taxes at closing, you shouldn’t run off and spend your sale profits without considering the IRS. If you have lived in your home as a married couple for more than two years, you can generally exclude the first $500,000 in capital gains. If you are single, that number is $250,000. All the closing costs you incurred when you purchased the home, along with all the repairs you made while owning it, can be deducted from your tax liability.
Fix Up Costs to Sell: The last item brings us conveniently to the costs your agent might advise you to spend before listing your home to attract the best offer. Depending on your budget, renovating your home for a sale could run to tens of thousands of dollars (or more!). However, this is deductible when tax time comes around. If the renovation helps achieve a much higher sales price, it’s money well spent.
Other Expenses: Assuming you don’t own a van and your friends and family won’t help you move, you’ll have to pay for movers, which could run from $2,000 to $10,000 or more. You will also likely incur a deed transfer fee (0.008% of the sales price. Around $125 on a $1.5 million sale), and there will be an ACRIS filing fee of around $50.
Conclusion
After all is said and done, it’s safe to budget 10% of your home’s sale will be best on closing costs when using an agent in NYC. However, many sellers can offset many of these costs in their taxes. Before you even decide to list your home, a chat with your accountant could be a good idea.
