Co-Op Closing Costs in New York City
New York Co-Op Closing Costs-How much will I Pay?
Let’s talk about:
1. The difference between co-ops and condos and how that affects closing costs.
2. The difference in closing costs between a co-op and condo in New York City.
3. The amount you’ll pay for a typical co-op closing in New York City.
4. A short history of why I love the New York Rangers.
If you would like to talk to a lawyer to discuss this information further.
Please call Gershburg Law at 212-390-8866.
The Difference Between Co-Ops and
- Jonathan Miller, the President of the Miller Samuel appraisal firm, and one of the foremost experts in New York City Real Estate, states in this New York Times article, that the ratio is 75% co-op to 25% condo in terms of availability. So, 3 out of 4 apartments you’re going to be able to buy is going to be a co-op. But real estate in New York City is a little nutty right now. According to Miller Samuel, the despite the fact that there are about 3 co-ops to ever condo in New York City, the available inventory, right now, is nearly identical. Meaning you have just as much of a shot of finding a co-op on the market as you do a condo, even though the vast majority of units in the City are co-ops. That’s somewhat insane, and it speaks to the current real estate market in NYC.
2. What the hell is a co-op anyway?
Everyone is always going to tell you that the closing costs you’ll pay when you buy a co-op in New York City will be far less than buying a condo. That’s true. Part of the reason behind that is the difference in legal classification between a co-op and a condo. When you buy a condo in New York, you’re buying real property. While co-ops are considered real property under New York State tax law, they are not considered real property in terms of an ownership interest. In plain English, you’re not buying a 1-2 family house, but instead your buying shares in a co-operative. As opposed to receiving a deed at the closing, you receive co-operative shares (yes, like the ones you buy at Staples). At the end of the day, because you’re not buying real property, you’re going to be spending considerably less in closing costs (that’s not to say
you’re not crazy there aren’t disadvantages if you decide to buy a co-op.)
3. How much are the typical NYC closing costs for a purchase?
First things first-you’re going to be paying a hell of a lot less than you would when you buy a co-op than a condo at the closing table. One of the main reasons is that because you’re buying shares and not real property, you can forego purchasing title insurance (which covers real property). As I recently discussed, on a $600,000 purchase of a condo in New York City, you can expect to pay about $3,000 for title insurance alone. You won’t be paying that when you buy a co-op. Instead of title insurance, you’ll be purchasing a lien search, which will show whether or not there are any liens/judgments, etc. on both the Unit you are purchasing and the co-operative building as a whole. Total cost for this search will typically be under $400 ($3000 vs $400). You’re also not paying for mortgage taxes at the closing. That’s HUGE. Arnold Schwarzenegger huge. Let’s go back to that $600,000 example above. If you buy a $600,000 condo, and you get a mortgage for 80% of the purchase price, you’re paying about $8,6000. You’re not going to pay that if you buy a co-op ($8600 vs $0). So, at the most basic level, expect to save about $11,600 or so if you’re buying a $600,000 co-op vs. a $600,000 condo. Yes, other fees may be different, and yes, you’re going to paying some fees for a co-op that you wouldn’t pay when buying a condo, but it’s quite clear you’ll
be saving a large amount of money at the closing table.
Street Easy has an informative video discussing the closing cost difference between a condo and co-op. Let’s hope there is actually someone to this women’s left, or else this would be somewhat weird.
4. What are the NYC Co-Op closing costs if you buy?
- Lien Search (about $400)
- Moving in Deposit (the amount you pay depends on the co-op but it’s typically $500-$1000)
- First months maintenance (varies)
- Co-Op closing fee (it’s a fee you pay because the person at the co-op office compiles copies and makes you sign. (Up to $1000. No, you can’t argue with them. Yes, I have tried.)
- Your attorneys fee (Hi!!)
- Other small miscellaneous recording fees, power of attorney fees, etc.
5. And now, on the eve of Game of the 2014 Stanley Cup Finals, a short video evidencing why I love the New York Rangers