The following is a general outline of what to expect:
The Deal Sheet. Once you have accepted an offer, your real estate broker/agent will circulate a Deal Sheet which lays out the terms of the transaction. This document will be used to draft the contract terms and should reflect the exact deal terms that you have agreed to.
FIRPTA. The Foreign Investment in Real Property Tax Act (FIRPTA) is a tax law that imposes U.S. income tax on foreign persons selling U.S. real estate. Under FIRPTA, a foreign seller must comply with certain tax withholdings and they may be required to withhold 10% - 15% of the amount realized from the sale. The amount realized is normally the purchase price and that amount will need to be sent by check at closing to the IRS unless the seller has obtained a Withholding Certificate in advance.
IT-2663 (real property) and IT-2664 (co-op). These forms are required to be completed whenever there is a sale of New York Real Estate by a New York State nonresident. In addition to federal taxes, the nonresident seller is liable for state income tax based on the profit recognized from the sale. After computing their tax liability according to current New York income tax rates, the seller reports those numbers and includes a check for the the full tax liability with the completed form to be submitted at closing.
Individuals are exempt if they are NYS residents at the time of closing or if this was their primary residence for two of the last five years prior to closing.
The inspection. If your buyer wishes to engage the services of an inspector, these inspections usually take 1 - 2 hours and are done in the presence of the buyer/buyer’s real estate agent and the seller/seller's agent. The buyer may use the findings as a negotiation tool or to ask for certain repairs.
The Contract of Sale. My office will prepare and send a proposed contract and seller's rider to the buyer’s attorney (who may have their own purchaser's rider). Once the contract and riders are negotiated, the buyer will sign the contract and return it to my office with their deposit wire/check. You will then countersign the contract and you'll officially be “in contract.”
It would be helpful to gather the following documents even before a contract is signed:
The title search. Once "in contract", the buyer will order a title search which will show mortgages, liens, violations, open building or work permits, or anything that could potentially affect the transfer of title at the closing. I will provide you with a copy of the title report and alert you to any red flags.
The final walk through. Within 24 - 48 hours of the closing, the buyer will perform a final walk through of the unit/premises with their broker/agent.
The closing. Once the buyer has secured their mortgage (if financing) and received a “clear to close” notification from their lender, we’ll work with all parties to schedule a closing date (the property’s ownership will be legally transferred from you to the buyer).
Before the closing date, my office will obtain a pay-off statement for your current mortgage (if any) and complete all adjustments for taxes, oil and water bills or common/maintenance charges and send you a closing statement.
You must bring the following to your closing:
After the closing. After the closing, my office will send you a final closing statement that summarizes the completed transaction with a copy of all closing documents.
The following is a general outline of what to expect:
The Deal Sheet. Once your offer has been accepted, your real estate agent will circulate a Deal Sheet which lays out the terms of the transaction. This document will be used to draft the contract terms and should reflect the exact deal terms that you have agreed to.
The inspection. While it is not mandatory to conduct a property inspection in New York State, it is highly recommended that you have a licensed engineer perform a thorough inspection (in the case of a condo or co-op, especially if purchasing a in a building with less than 10 units). This is to ensure that you know what problems the property may have, including structural, electrical, roof, basement or mechanical systems. The inspection may be used as a negotiating tool to get a lower price if structural or costly issues are discovered.
The Contract of Sale. The seller’s attorney will prepare the contract (usually along with a seller's rider). My office will negotiate any changes to this contract to better protect you. Once you are comfortable with the terms, you will sign the contract and provide a deposit wire/check to seller's attorney. The seller’s attorney will deposit your check into their escrow account where the funds will be held until closing. The seller will then sign the contract at which point the parties will be considered to be officially “in contract.”
The mortgage. [If your purchase is contingent on obtaining a mortgage] Within 30 - 45 days of signing the contract, you must secure a firm mortgage commitment from a lender (before starting the buying process, you should already be preapproved). In most cases, a satisfactory appraisal is what makes this a "firm" commitment, so it is prudent to have the appraisal be conducted as late into the 30 - 45 day contingency period as possible.
The title search. Once you are "in contract", my office will order a title search that will show any issues that could potentially affect the transfer of title at closing. Prior to closing, all title issues must be cleared - I will provide you with a copy of the title report and alert you to any red flags. Some common title clearance issues are:
The final walk through. Within 24 - 48 hours of the closing, you should schedule and perform a final walk through with your broker/agent, contact utilities to transfer and/or open accounts and schedule your movers. If you find any unexpected problems during the final walk-through, notify my ofice immediately and we will address the issue with the seller’s attorney.
The closing. In the case of a condo or co-op, the condo must first issue their "waiver" or the co-op must approved you. If financing, you must receive a “clear to close” notification from your lender which will enable us to schedule a closing date (the property’s ownership will be legally transferred from you to the buyer).
You must bring the following to your closing:
After the closing. After the closing, my office will send you a final closing statement that summarizes the completed transaction with a copy of all closing documents.
Transfer Tax
New York State – 0.4% of sale price if $3,000,000.00 or less;
0.65% of sale price if more than $3,000,000.00.
PLUS
New York City – 1% of sale price if $500,000.00 or less;
1.425% of sale price if more than $500,000.00.
FIRPTA and/or IT-2663 or IT-2663 if applicable (explained above)
Real Estate broker commissions
Typically 6% of sales price, paid at closing.
Condominium or Cooperative Corporation closing costs
Varies by building, but may include (not limited to): adjustments at closing for real estate taxes, maintenance, common charges, electricity and/or water bill, payoff attorney fee, etc.
Satisfaction of mortgage filing fee
Often included in the final payoff, varies by lender.
Closer Appearance or “Pick Up” fee
Title companies typically charges a fee of ~$250.00 per mortgage so as to ensure the mortgage payoff funds are sent to the lender and to file the satisfaction of mortgage. If there is no mortgage, then it is customary to give the closer an attendance fee of ~$200.00.
New York State Real Property Disclosure Credit
New York State Real Property Law Article 14 requires sellers of 1-4 family residential real property to disclose known defects within home prior to contract. Alternatively, the seller may give a $500.00 credit at closing. This does not apply to the following:
An Amendment to the Property Condition Disclose Act will become effective March 2024 and will remove the option to provide the $500.00 credit, thus requiring Sellers to complete and deliver the new Property Condition Disclosure Statement to Purchasers starting March 20, 2024.
Bank Fees (if financing)
Largely lender-specific, below is a list of typical fees (not exhaustive).
Title Charges
Below is a list of typical fees (not exhaustive).
Insurance
Homeowner’s insurance should also be obtained. Please consult an insurance agent for the costs associated with this type of insurance.
Mansion Tax
1% if $1,000,000.00-1,999,999.99; 1.25% if $2,000,000.00-2,999,999.99; gradually increasing with purchase price up to 3.90% if $25,000,000.00 and over.
Mortgage Tax
New York City
Nassau and Suffolk counties
Note: as per most New York State real estate contracts, purchasers will need official bank checks drawn from New York State bank accounts at closing. Please ensure that funds are liquid and available well in advance of closing to reduce the possibility of delays.
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