Condo Vs. Co-Op Closing Costs
May 28, 2020
We’re talking closing costs this week and for what are essentially a few rooms inside a big building, inside an even bigger city, whether that collection of rooms is called a condo or a co-op makes a big difference in your closing costs!
Let’s take a closer look at those differences.
When it comes to condos and co-ops, many people assume there are few, if any, differences. By now, you should know that’s not entirely accurate! Consider closing costs, where condos tend to rack up more in closing fees than do co-ops.
If you’re buying a co-op, you can estimate you’ll need to set aside between 1 to 2 percent of the purchase price. If the co-op costs more than $1 million, it will be closer to 2 to 3 percent (per NYC’s “mansion tax,” a misleading name that is actually applicable to any property that costs more than $1 million, even if it’s a good old one bed, one bath).
Condo closing costs, on the other hand, are more likely to be in the 2 to 4 percent range, while new construction condos can even be as high as 5%. You might be wondering why such a big difference. Well, a lot of it comes down to the fact that when you buy a co-op, you’re actually buying a “share” with a proprietary lease on the apartment. Therefore, co-op buyers are not having to pay for things like the mortgage recording tax or title insurance.
If you’d like some help estimating your closing costs, be sure to read our Closing Costs 101.