high closing costs on new construction & downpayment??

[muziqgod]

Forgive my ignorance, please. Is paying both the buyer and seller tax standard for new construction purchases? Just recently I began checking out some new buildings with hopes of of buying and moving in 2007. After speaking with an onsite agent in one, I was told closing costs come out to be 5.5% or nearly 40K on the unit we were particularly interested. This on top of the downpayment is a very large and unexpected expense - and from my understanding, considerably higher than not being the 1st owner on a condo.

So aside from the fact that so many NYers can purchase at the prices they do, it boggles me that even on places that seem reasonable for NY standards (say the 6-800K range), all these people can also afford an extra 5.5% on top of the downpayment of 20% in all these new constructions that went on the market in the last 2 years.

Or is it just possible, people aren’t really putting 20% down so they have the money for the extra costs associated upfront, but instead paying more because of the higher interest rates??

Maybe it’s just that NYers are that wealthy and I should stop looking at new construction.

[cjthekid]

It is standard...and New Yorkers are that wealthy.

[MrSpice]

Closing costs are very high in New York City for new condos because you pay both seller's and buyer's closing costs. One way to reduce your closing costs is to buy a condo that is not brand-new (i.e., from another person rather than the builder). Most apartments in Manhattan are coops. Closing costs are much lower for coops since technically you're not really buying a coop - it's called a proprietary lease.

Here is the summary of the closing costs:
http://www.cityrealty.com/resources/closing_costs.cr

Obviously, you can make the donwpayment smaller and increase the size of your mortgage. NYC is not cheap. You can purchase something in Jersey City or Hoboken in New Jersey where the closing costs are much lower.

[Front_Porch]

Most people who buy new construction love it. Just look at the Orion thread to see how happy happy all those residents/investors are with their new condos.

That said, if you're a first-time buyer on a budget (as most first-time buyers are) new construction is probably a bad choice for you. As the posters above noted, your money will go a lot further in a co-op or a not-quite-brand new condo.

One way to think about what you're buying is to look at average price per square foot (which can be a little tough, since members of my profession are notoriously bad with numbers and tend to add extra zeros).

www.millersamuel.com will let you look at per square foot prices for different neighborhoods in the city.

Good luck!

ali r.
{downtown broker}

[BrooklynRider]

Hold off buying for another 6 months. The excessive development should sink prices further in average units until now being passed off without a sniff as "high end luxury."

[bigkdc]

You will find that the sponsors in new constructions are less willing to lower prices but they will negotiate on closing costs (for reasons I won't bore you with). You may be able to get them to give you a credit that goes towards your closing costs.

[harsaphes]

if you go in without a broker, you can get them to remove the broker fee from your cost of buying.

[Front_Porch]

I'm certainly biased, but I don't think that "if you go in without a broker" is a fair statement; if you go in with a broker, you can still get a discount too.

It's not like the marketing costs of the apartments suddenly vanish if you're unrepresented.

The seller is paying a brokerage fee on their end -- it's not terribly material whether your broker takes part of that split.

ali r.
{downtown broker}

[Peteynyc1]

Apply all those tax abatement savings toward your closing costs :)

[shocka]

If you are planning on living there for 5+ years.. i wouldl say just buy a co-op you will get ALOT more room for the money, and a nice building.

Also one thing to note is that ALOT of the new construction condos allow 90% financing or 10% down, which is a route MANY will take to buy their dream.