Issue 111 - Closing Costs: What You Should Know

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Issue 111 – Closing Costs: What You Should Know

July 1, 2025

In New York City real estate, just when you think you’ve reached your limit, there’s always more. Enter: the infamous closing costs. These fees are substantial and in addition to the purchase price. Many buyers find them shocking and disheartening at the closing table.

The term “closing costs” can encompass the friction costs associated with the resale of condos and co-ops, as well as new construction. Each one has a nuanced cost specific to that type of ownership, such as attorney, brokers and bank fees, capital contributions, the mortgage filing recording tax, transfer taxes, title insurance (condos and townhomes), the flip tax (for co-ops), the mansion tax (if the purchase is over $1 million), and a portion of the Resident Manager’s Unit [RMU] (if in new construction).

When buying or selling a property, the total sum of closing costs can be hefty, sometimes as high as 10 percent over the purchase price. A buyer will typically pay between 2 percent to as much as 6 percent on a resale, depending on whether it is a condo, townhouse or co-op; that amount can be substantially higher for new development purchases. Conversely, a seller who originally bought into new construction and had to pay transfer taxes with that purchase now has to pay them again when selling.

Those purchasing in a new development should be aware that additional breadth of friction costs will be incurred, as the building has not yet been occupied. Those fees include contributing one to two months of common charges to the building’s reserve fund to comply with Fannie Mae and Freddie Mac loan requirements, as well as purchasing a portion of the Resident Manager’s Unit [RMU] if the building has a resident manager or superintendent.

All properties listed for over $1 million are subject to adjusted mansion taxes, which are based on a sliding scale determined by the sales price, in addition to transfer taxes typically paid by the sponsor (i.e., the developer).

According to StreetEasy, a third-party listing site for New York City, “A good rule of thumb for buyers is to be prepared to spend 2-5% of the purchase price in closing costs, and expect the percentage to be on the higher end for condos, townhouses, homes over $1 million, and new developments.”

*Table provided by StreetEasy – Exact mansion tax rates are as follows:

Mansion Tax Rate	Purchase Price
1.0%	$1,000,000 – $1,999,999
1.25%	$2,000,000 – $2,999,999
1.50%	$3,000,000 – $4,999,999
2.25%	$5,000,000 – $9,999,999
3.25%	$10,000,000 – $14,999,999
3.50%	$15,000,000 – $19,999,999
3.75%	$20,000,000 – $24,999,999
3.90%	$25,000,000 or greater

For example, the mansion tax is 1.25% for properties listed between $2 million and $2.99 million, 1.50% for homes between $3 million and $4.99 million, and as much as 3.90% for a property with a sales price of $25 million.

This amount is compounded by the combined city and state transfer tax, which has also increased substantially, going from a flat rate of 1.825% (regardless of the sales price) to a sliding scale model, as outlined below:

1.4% for sales below $500,000
1.825% for sales between $500,000 and $3 million
2.075% for sales of $3 million or more

Therefore, a buyer purchasing a property for over $3 million could end up paying nearly 7% of the price just for the mansion tax and transfer tax.

Consider this only-in-NYC scenario: In 2019, billionaire Kenneth C. Griffen bought a penthouse at 220 Central Park South for a record-breaking $238 million, making it the most expensive residential sale in U.S. history at the time. Although the exact closing costs are not publicly available, estimates indicate the mansion tax alone would have been around $9.282 million! He would have also had to pay the transfer tax at the 2.075% rate, equaling over $4 million!

The only upside to some closing costs is that they offer the ability to negotiate, depending on the market conditions. When buying in a new construction, for example, the sponsor typically expects the buyer to absorb these costs. However, in a down market, the buyer can potentially pass the mansion and transfer tax costs back to the sponsor, who may be willing to absorb the fees as a concession, thereby adding to the net savings for the buyer.

In some cases, a buyer could even try to incorporate closing costs into the mortgage. Whether or not this happens, ultimately depends on how creative your mortgage broker is in structuring the loan. Certain banks are also able to make exceptions versus maintaining ‘vanilla’ loans that offer no flexibility.

According to an article by Evelyn Battaglia in BrickUnderground, “The responsibility for some of these taxes is not set in stone. When the market is slow, inventory is high, or an apartment is difficult to sell, a seller or developer may be willing to cover some costs to seal a deal.”

Assembling a team of well-versed and experienced professionals can make a substantial difference in the amount you have to spend. The key is identifying what to ask for and when, which can save you as much as 5% to 10% over the negotiation of the sales price, creating a quite compelling deal.

It’s essential to work with people who know how to effectively close these kinds of deals. You should also price shop, comparing quotes from all the professionals you work with, notably real estate attorneys and mortgage brokers (or lenders), to understand the specific costs associated with each transaction and explore strategies for reducing them, as all those friction costs certainly add up.

The person who understands the structure in critical detail and knows how to negotiate it ultimately yields the most success. It is an art form to know how to structure deals effortlessly and garner the most profound value in real-time for their clients.

By exploring strategies for reducing all these costs—and most importantly, examining the total value proposition—you can have a stress-free closing, knowing that you were ultimately able to lock in savings before you even move in!

Issue 124 – “The Freeze Heard Across New York”

August 1, 2026

Even those of us who spend most of our days in the world of sales rather than rentals cannot ignore the conversation dominating New York real estate this summer: the city’s newly approved two-year rent freeze on nearly one million rent-stabilized apartments. The decision, fulfilling one of Mayor Zohran Mamdani’s signature campaign promises, has ignited passionate debate from tenants, landlords, developers, and economists alike.

As Time Magazine recently reported, “’Freeze the rent’ became the definitive rallying cry of Mamdani’s affordability-focused mayoral campaign for New York City, one of the most expensive cities in the world. Despite skepticism that he could actually pull it off, a board he controls made good on his pledge just six months into his term.”

In a 7-1 vote this June, the Rent Guidelines Board approved a rent freeze on one- and two-year leases on rent-stabilized apartments — which, according to the Time article, “make up about 27% of overall NYC housing stock.”

For tenants living in stabilized housing, the appeal is obvious. In a city where affordability persists as one of the defining challenges of our time, freezing rents offers immediate relief and greater certainty in an increasingly pricey environment.

Yet, as is so often the case in New York real estate, the story is more nuanced than the headlines suggest.

The New York Post presented the other side of the story, explaining that building owners are grappling with rising operating costs: insurance premiums, labor expenses, property taxes, and capital improvements have all increased substantially.

Critics argue that while the freeze protects tenants in the short term, rising expenses without corresponding rent increases may make it harder, particularly for smaller landlords, to maintain and improve aging buildings.

Rent freezes are not unprecedented. Previous freezes have provided short-term relief for tenants while renewing debates over maintenance, capital improvements, and investment in aging housing stock.

The broader issue is supply. Economists across the political spectrum generally agree that New York’s housing shortage cannot be solved through rent regulation alone. As Vox reported, demand continues to outpace inventory, making new housing production, zoning reform, and development incentives essential.

Although the freeze does not directly affect market-rate apartments, landlords with both stabilized and market-rate units may feel pressure to offset constrained revenue by increasing free-market rents where legally permissible. New York State’s 2024 Good Cause Eviction law, however, limits annual rent increases to the lesser of 10% or the local inflation index.

For buyers, particularly investors considering multifamily assets, the freeze introduces additional uncertainty around future income growth. Buildings with significant rent-stabilized components may trade at lower valuations because purchasers will have to underwrite higher operating costs against stagnant revenue.

For sellers, especially owners of mixed-use or rent-stabilized assets, the challenge becomes demonstrating long-term upside. We may see some owners delay sales, while others bring assets to market sooner out of concern that future regulation could become even more restrictive.

From a residential perspective, one unintended consequence may be increased demand for condominiums and co-ops. When rental policy becomes less predictable, many affluent New Yorkers begin to view ownership as a more stable, controllable alternative.

Foreign investors are unlikely to retreat from purchasing trophy condominiums or prime co-ops, which operate outside the stabilized system. In fact, increased regulation in the rental market could strengthen the appeal of luxury ownership as a store of wealth.

The greater consequence will be on institutional and international investors exploring multifamily acquisitions, where limits on revenue growth coupled with rising operating expenses may prompt some capital to pause, reprice risk, or seek opportunities elsewhere.

A major concern today is that the economics are more challenging than they were a decade ago. The Rent Guidelines Board’s own data shows that operating expenses continue to rise, with insurance costs increasing by more than 10% and overall operating costs rising by more than 5%. The effects will likely be felt most acutely in neighborhoods with large concentrations of rent-stabilized housing, while luxury condominium markets such as Tribeca, SoHo, and much of the West Village, where condominium and market-rate inventory dominate, will experience relatively little direct change.

New York remains one of the most desirable real estate markets in the world. The larger question is whether future housing policy can strike the right balance between protecting tenants and preserving the incentives necessary to maintain and improve the city’s housing stock. Recent reporting suggests that landlords and tenants alike are increasingly worried about the long-term sustainability of that balance.

Perhaps most interesting is what this moment reveals about New York itself. Housing has become far more than an economic issue—it has become a cultural and political one. The debate over rent stabilization reflects larger questions about who gets to stay in the city, who can afford to enter it, and what balance should exist between protecting existing residents and encouraging future investment.

As someone whose business focuses primarily on the sales market, I often remind clients that New York real estate rarely moves in straight lines. Policy shifts ripple through every corner of the market, shaping rental demand, buyer behavior, and investment strategy alike.

Yet what doesn’t change is New York’s capacity to reinvent itself. The conversation around housing will evolve, administrations will change, and policies will come and go. But the city’s enduring challenge — and opportunity — will always be finding ways to be both livable and aspirational.