Transaction Costs: Manhattan Condominium

For buyers, these costs generally equate to about 6 percent of the loan amount for financed purchases and roughly 2 percent of the price for cash transactions. Conversely, sellers encounter transaction costs of approximately 8 percent of the property's price, and the local equivalent to stamp duty is composed of government taxes like mansion tax and transfer taxes.

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Expenses as Owner of Property in New York

Wei Min Tan discusses the two categories of expenses as owner of property in New York — Closing Costs at Purchase and Ongoing Expenses.

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Developers Cease To Offer Condo Incentives

BY JULIE SATOW
Published: May 11, 2012

THREE months ago, when Wei Min Tan, a broker at Rutenberg Realty, negotiated a deal for a new $3 million three-bedroom condominium at the Aldyn on the Upper West Side, he was able to save his buyers $95,000 in transfer taxes and other costs, as well as to finagle a free storage space.

But now, Mr. Tan said: “I don’t know if I could get the same deal. Literally a month ago, the market turned, and there is now a feeding frenzy.”

The optimism that has washed over the New York real estate market this spring has swept up new developments in its wake. As recently as late last year, buyers could expect to negotiate with developers on price and closing costs like taxes and legal fees. But these incentives are rapidly drying up, buyers, brokers and developers say.

FAQ Foreign / International Buyers of Manhattan New York Property: Condos, Mortgage Financing, Expenses, Broker Fee

Can foreigners buy property in Manhattan, New York?Yes. Many foreigners buy property in Manhattan because of the brand value and appreciation potential. They often purchase as a pied-a-terre (vacation home), or investment property. A large percentage of our clients are international, from countries like Malaysia, Singapore, Hong Kong and China.

What type pf properties are popular amongst foreign or international buyers?
There are two categories of apartments, condos and co-ops. We recommend condos because of the higher appreciation and investment value. Co-op buildings often restrict ability to rent and perform renovations and do not make good investment property. The process of buying a co-op is subject to board approvals which dramatically prolong the buying process. The value of a condo, on a per-square-foot basis, is about 20 to 30 percent higher than a co-op. However, the appreciation potential and demand are higher as well.

Besides apartments, our international clientele also purchase townhouses, mixed use buildings and commercial buildings.


What are the expenses associated with owning a property in Manhattan?
For apartments, the main monthly expenses are taxes, common charges, insurance and depending on whether financing was used, mortgage principal and interest.

New development buildings often have a tax abatement which dramatically reduces the monthly tax amount. Without abatement, annual taxes are often between 0.5 to 1 percent of the property’s value. Common charges average $1 per square foot per month and it goes up or down depending on number of units and amenities. Insurance is roughly $500 to $1000 per year and on a monthly basis, a relatively smaller expense item.

Is financing available for foreign or international buyers?Yes, mortgage loan financing is available and can be obtained either through a mortgage broker or directly from the bank. Since the credit crisis, lenders have tightened credit criteria and will require about 40 percent as downpayment from a foreign buyer. Most mortgage products for foreigners are ARMs (adjustable rate mortgage) but some lenders offer 30 year fixed mortgage to foreigners. We will refer our foreign clients to reputable mortgage brokers or banks to help arrange financing.

What are closing costs?Closing costs are roughly 3 to 5 percent of the loan amount. This includes mortgage tax, transfer taxes if purchasing a new development, attorney fees, recording taxes and other administrative expenses.


Who pays the broker fee?
In New York, broker fees are paid by the seller. When the seller’s broker agrees to list the property for sale, a certain percentage is agreed upon as commission. If the buyer is represented by a broker, this commission will be split with the buyer’s broker. If the buyer does not have a broker, then the seller’s broker keeps the entire commission. Hence, it is in the best interest of the buyer to have broker representation to help identify the right property and negotiate the best price.

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Contact Wei Min at tan@castle-avenue.com on how we can help you grow wealth through Manhattan property.