By Eric Berman, REALTOR® | The Eric Berman Team at Compass
TL;DR:
Selling a Long Island home involves substantive costs across multiple categories that most sellers underestimate before listing. Commission structure fundamentally changed after the August 2024 NAR Sitzer/Burnett settlement — buyer's agent compensation is no longer automatically included in seller-paid commission, changing the total cost framework. NY-specific closing costs include attorney fees ($1,500-$3,500 typical for standard transactions), NY State Transfer Tax at 0.4%, potential Nassau/Suffolk/NYC local transfer tax additions, Mansion Tax progressive brackets at $1M+ (technically buyer's obligation but affects seller-side pricing dynamics), title-related fees, and recording fees. Capital gains framework applies where sale proceeds exceed the Section 121 primary residence exclusion ($250K single / $500K married filing jointly), with substantially different framework for inherited property due to stepped-up basis. Pre-listing preparation, post-contract inspection response, and closing-day cost coordination add additional cost categories. Substantive net proceeds analysis before listing produces meaningfully better outcomes than encountering costs surprise during transaction.
Post-Settlement Commission Framework: The 2024 Change
Commission structure represents the largest single cost category for most Long Island sellers, and the framework fundamentally changed following the National Association of Realtors' Sitzer/Burnett settlement — approved in April 2024 and effective August 17, 2024. Sellers researching cost frameworks based on pre-2024 content encounter substantially outdated information.
Pre-August 2024 practice. Sellers typically paid total commission of 5-6% of the sale price, with the listing broker automatically sharing a portion (typically 2-3%) with the buyer's broker through the multiple listing service (MLS). Buyer's agent compensation was effectively automatic and required through MLS rules.
Post-August 2024 practice. MLS systems no longer include buyer's agent compensation as a required listing field. Sellers can still offer buyer's agent compensation as a negotiable concession — many sellers do — but it's no longer automatic. Buyer's agents are now required to have written buyer-broker agreements with their clients before showing properties, meaning buyers know upfront what their agent's compensation structure is.
What this means for Long Island seller cost planning. Sellers can potentially reduce total commission cost by not offering buyer's agent compensation, though this typically reduces the buyer pool for the property (many buyers can't or won't cover their agent's compensation directly). The specific commission structure for any particular listing is negotiated between the seller and listing broker, and any buyer's agent compensation offered is separately negotiated. Total effective commission after settlement varies substantially by transaction — some sellers pay 4-5% total (listing only, no buyer's agent offered), others pay 5-6% (listing plus buyer's agent compensation offered), and some pay differently structured arrangements.
For substantive planning purposes, most Long Island sellers should budget 4.5-6% of sale price for commission depending on their specific listing agreement and buyer's agent compensation approach. The specific analysis for any particular property requires substantive conversation with the listing broker.
NY-Specific Closing Costs
Beyond commission, NY-specific closing costs represent the next substantial cost category. Understanding the specific framework matters for accurate net proceeds analysis.
Attorney fees. NY is an attorney state — the seller's real estate attorney coordinates the transaction throughout. Standard residential transaction attorney fees typically run $1,500-$3,500, with complexity factors (probate coordination, divorce coordination, multi-heir estates, contested title issues, lien resolution, condominium coordination) running substantially higher. Attorney selection matters substantially — experienced NY residential real estate attorneys typically produce meaningfully smoother transactions than general practice attorneys at similar fee levels.
NY State Transfer Tax. Sellers pay NY State Transfer Tax at $2 per $500 of sale price (0.4% effective rate). For a $850,000 property, this is $3,400. The tax applies to essentially all residential real estate transactions.
Nassau County additional transfer taxes. Nassau County doesn't impose an additional county-level transfer tax on residential sales beyond the NY State tax. Specific municipal jurisdictions within Nassau County may have limited additional recording-related fees but not substantial additional transfer taxation.
NYC Real Property Transfer Tax (RPTT) for Queens properties. Properties in the Queens portion of Long Island (Bayside, Fresh Meadows, Jamaica Estates, and other Queens communities) fall under NYC jurisdiction and face the NYC Real Property Transfer Tax in addition to NY State Transfer Tax. NYC RPTT runs 1% for residential sales under $500,000 and 1.425% for sales above. This adds substantially to closing costs for Queens sellers compared to Nassau or Suffolk equivalents.
Mansion Tax framework. The NY State Mansion Tax applies at $1 million and above with substantial progressive brackets: 1% at $1M-$2M, 1.25% at $2M-$3M, 1.5% at $3M-$5M, 2.25% at $5M-$10M, 3.25% at $10M-$15M, 3.5% at $15M-$20M, 3.75% at $20M-$25M, and 3.9% above $25M. The Mansion Tax is technically the buyer's obligation, but sellers pricing property near thresholds face buyer-side affordability considerations that meaningfully affect pricing dynamics and negotiation.
Recording fees. Nassau County Clerk's office and Suffolk County Clerk's office charge specific recording fees for satisfaction of mortgage, transfer of title, and other document recording. Typical recording fees run $200-$500 for residential transactions depending on document volume.
Title-related fees. While buyers typically purchase title insurance, sellers may face title-related costs for satisfaction of encumbrances, resolution of lien situations, or specific title issues discovered during buyer's title search. The Nassau County lien resolution framework covers specific situations where substantial title-related costs apply.
Capital Gains Framework
Capital gains represent potentially the second-largest cost category for many Long Island sellers, particularly for long-held properties in appreciating sub-markets. The framework varies substantially by seller circumstances.
Primary residence exclusion (Section 121). Sellers of primary residences may exclude up to $250,000 of capital gain from federal taxation (or $500,000 for married couples filing jointly). Requirements include ownership and use as primary residence for at least two of the previous five years. For most Long Island sellers meeting these requirements, primary residence sale proceeds up to the exclusion amount face no federal capital gains taxation.
Long-held property beyond the exclusion. For sellers whose gain exceeds the Section 121 exclusion (common for long-term Long Island homeowners in appreciating sub-markets), the excess faces federal long-term capital gains taxation at rates ranging from 0% to 20% depending on total income, plus 3.8% Net Investment Income Tax where applicable. NY State also taxes capital gains at ordinary income rates (up to 10.9% at the highest brackets), meaning combined federal-state capital gains taxation can substantially exceed 20% at higher income levels.
Inherited property (stepped-up basis). Property inherited from a deceased owner receives stepped-up basis at the date of death. If the beneficiary sells shortly after inheriting, capital gains are typically minimal because the sale price closely matches the stepped-up basis. The companion inheritance framework covers stepped-up basis in substantive depth.
Long-term vs. short-term. Capital gains held for more than one year face long-term rates (typically substantially lower than ordinary income rates). Properties held less than one year face short-term rates equivalent to ordinary income taxation. Most primary residence sellers meet the long-term threshold; specific analysis for shorter-held properties requires substantive tax professional consultation.
NY State capital gains framework. NY State treats capital gains as ordinary income at rates up to 10.9%. This means the combined federal-state capital gains burden can substantially exceed federal-only calculations, and specific application requires substantive tax professional consultation.
For sellers of long-held Long Island properties, the capital gains long-held property framework covers substantive detail. Specific application to any particular sale requires substantive tax professional consultation.
Pre-Listing Preparation Costs
Pre-listing preparation represents a substantive but variable cost category. The specific framework depends on property condition, buyer pool positioning, and market conditions.
Targeted cosmetic updates. Fresh paint, updated hardware, refinished floors, deep cleaning, decluttering, and curb appeal work typically run $8,000-$25,000 for mid-market Long Island properties. The renovation vs. as-is framework covers specific ROI considerations.
Professional staging. Full professional staging for Long Island properties typically runs $2,000-$8,000 depending on property size, duration, and staging company. Partial staging (accent staging, targeted room staging) runs less. Staging typically produces meaningful ROI for properties in specific market segments.
Professional photography. Professional photography (essential for effective marketing) typically runs $500-$1,500 depending on property size and photographer package. Cell phone photos meaningfully underperform professional photography and reduce buyer engagement.
Cleanout services. Properties requiring substantial cleanout (particularly inherited properties or long-held properties with substantial accumulated possessions) can require cleanout services running $2,000-$10,000 depending on scope.
Compass Concierge and similar deferred programs. Compass Concierge is a program where Compass advances preparation costs to sellers with repayment at closing from proceeds. This can help sellers who lack liquid capital for pre-listing preparation but have equity in the property. The specific program terms and eligibility require substantive conversation with Compass.
Post-Contract and Closing-Day Costs
Beyond pre-listing preparation, post-contract and closing-day costs represent additional categories.
Buyer inspection response. Post-contract inspection typically produces buyer requests for repairs, credits, or price adjustments. Typical inspection response costs run $2,000-$15,000 depending on specific findings and negotiation outcomes. Sellers who anticipate inspection response in their net proceeds analysis typically produce better outcomes than sellers who assume no inspection response cost.
Mortgage payoff. Outstanding mortgage balance including principal, accrued interest through closing date, and any prepayment penalties or fees. The seller's attorney obtains current payoff statement from the mortgage servicer for closing coordination.
Prorated property taxes. Nassau County and Suffolk County property taxes typically prorate between seller and buyer at closing based on the closing date within the tax period. Depending on timing, sellers may receive credit or owe adjustment.
Prorated utilities and HOA fees. Water bills, sewer bills, and HOA common charges (where applicable) prorate at closing.
HOA transfer fees. Where applicable (HOA-governed townhouses and condos), HOA transfer coordination may involve specific transfer fees ranging from $200-$500 typical.
Miscellaneous closing coordination. Wire transfer fees, courier fees, recording preparation fees, and other small coordination costs typically total $200-$500 for standard transactions.
Net Proceeds Analysis Framework
Substantive net proceeds analysis before listing produces meaningfully better outcomes than encountering costs surprise during transaction. The framework for a typical Long Island sale:
Start with expected sale price based on comp set analysis (the LI-wide pricing pillar covers the pricing framework).
Subtract commission at your specific listing agreement rate plus any buyer's agent compensation offered.
Subtract NY State Transfer Tax at 0.4% of sale price.
Subtract NYC RPTT (Queens properties only) at 1% or 1.425% depending on threshold.
Subtract attorney fees typically $1,500-$3,500 for standard transactions.
Subtract expected inspection response typically $2,000-$15,000 depending on property condition.
Subtract mortgage payoff if applicable.
Subtract prorated tax adjustments as applicable at closing timing.
Subtract expected capital gains where applicable beyond Section 121 exclusion.
Subtract pre-listing preparation costs if paid from proceeds.
The specific calculation for any particular sale requires substantive analysis with the listing broker and the seller's attorney. The home valuation starting point provides property-specific initial analysis without commitment.
A Recent Case: A Manhasset Seller Modeling Net Proceeds
A seller we worked with recently spent about six weeks modeling her net proceeds analysis before listing a Manhasset colonial. She'd owned the property for 22 years with an original purchase price of $340,000. Her current mortgage balance was approximately $85,000. She was married filing jointly and the property was her primary residence.
Our comp analysis suggested realistic sale price of $1,275,000 based on current Manhasset comp set. We built the substantive net proceeds analysis: expected sale price $1,275,000, minus 5% commission ($63,750), minus NY State Transfer Tax at 0.4% ($5,100), minus attorney fees estimated at $2,500, minus expected inspection response estimated at $6,500, minus prep costs of $17,000. Net before mortgage: $1,180,150. Minus mortgage payoff $85,000 = $1,095,150 before tax analysis.
Capital gains analysis: total gain approximately $935,000 (sale price $1,275,000 minus $340,000 original purchase minus $17,000 in preparation minus estimated $25,000 in capital improvements over 22 years documented through receipts). Section 121 exclusion for married filing jointly at $500,000 covered the first $500,000 of gain. Remaining $435,000 faced long-term capital gains taxation. At her income bracket, federal long-term capital gains rate was 15% plus 3.8% NIIT, plus NY State at 6.85% = 25.65% combined = approximately $111,600 total tax on the $435,000 taxable gain.
Final net proceeds analysis: approximately $983,550 after all costs and taxes. The specifics were unique to her situation, but the framework applies broadly: substantive net proceeds analysis before listing produces meaningfully better decision-making than assuming standard commission-only calculations. She used the analysis to inform her decision about whether to proceed with the sale, ultimately choosing to list based on her retirement planning framework.
A Practical Starting Point
For Long Island homeowners planning a sale, the right starting point involves substantive net proceeds analysis with realistic assumptions across all cost categories. The home valuation starting point provides property-specific initial analysis without commitment.
For broader framework understanding, the LI-wide pricing pillar covers the pricing framework that anchors net proceeds analysis, the accepted-offer-to-closing pillar covers the NY-specific post-acceptance mechanics affecting closing coordination, the LI-wide timing sub-pillar covers seasonal timing considerations, and the 5 Costly Mistakes hub covers common seller-side pitfalls including inadequate cost planning.
For sellers whose situation involves specific cost complexities, related content addresses each framework. The capital gains long-held property framework covers capital gains in substantive depth. The inheritance sale framework covers stepped-up basis for inherited property. The lien resolution framework covers title-related cost complications. The cash sale framework covers alternative cost comparison for specific circumstances.
The honest framing throughout: selling a Long Island home involves substantive costs across multiple categories that most sellers underestimate before listing. Commission structure fundamentally changed after August 2024 and continues to evolve, NY-specific closing costs vary substantially by sub-market and property price band, capital gains framework can substantially affect net proceeds particularly for long-held properties, and pre-listing preparation and post-contract costs add substantially to the total cost framework. Substantive analysis before listing produces meaningfully better outcomes than encountering costs surprise during transaction. Real estate transaction mechanics are the listing agent's territory; specific tax questions, capital gains calculations, and specific legal cost coordination consistently route to the tax professional and the real estate attorney.
FAQs
How much does it cost to sell a home on Long Island?
Total costs typically run 8-12% of sale price for most Long Island sellers when all categories are included: commission (typically 4.5-6% post-Sitzer/Burnett settlement depending on structure), NY State Transfer Tax (0.4%), NYC RPTT for Queens properties (1% or 1.425%), attorney fees ($1,500-$3,500 typical), pre-listing preparation costs ($8,000-$25,000 for mid-market properties), post-contract inspection response ($2,000-$15,000 typical), and closing coordination costs. Capital gains taxation adds substantially where applicable beyond the Section 121 exclusion. Substantive net proceeds analysis before listing produces meaningfully better outcomes than encountering costs surprise during transaction.
Do sellers still pay buyer's agent commission after the NAR settlement?
Not automatically. The NAR Sitzer/Burnett settlement effective August 17, 2024 changed the framework — MLS systems no longer include buyer's agent compensation as a required listing field, and buyer's agents are required to have written buyer-broker agreements with clients before showings. Sellers can still offer buyer's agent compensation as a negotiable concession, and many do because offering compensation typically expands the buyer pool. The specific structure for any particular listing is negotiated with the listing broker. Sellers should discuss the framework substantively with their listing agent before making assumptions about commission structure.
What are NY closing costs when selling a Long Island home?
NY-specific closing costs include: attorney fees ($1,500-$3,500 typical for standard residential transactions), NY State Transfer Tax at 0.4% of sale price, NYC Real Property Transfer Tax for Queens properties (1% under $500K, 1.425% above), Mansion Tax progressive brackets at $1M+ (technically buyer's obligation), Nassau County or Suffolk County recording fees ($200-$500 typical), title-related coordination costs, mortgage payoff, prorated property taxes, prorated utilities and HOA fees where applicable, and miscellaneous closing coordination costs. Total NY-specific closing costs typically run 1-3% of sale price beyond commission for most Long Island sellers.
Do I have to pay capital gains tax when selling my Long Island home?
For most primary residence sellers, the Section 121 exclusion covers substantial capital gain: $250,000 for single filers, $500,000 for married filing jointly, provided ownership and use as primary residence for at least two of the previous five years. For sellers whose gain exceeds the exclusion (common for long-term Long Island homeowners in appreciating sub-markets), the excess faces federal long-term capital gains taxation at 0-20% depending on total income, plus 3.8% Net Investment Income Tax where applicable, plus NY State capital gains at up to 10.9%. Combined federal-state capital gains taxation can substantially exceed 20% at higher income levels. Inherited property receives stepped-up basis, typically minimizing capital gains where sale happens shortly after inheritance. Specific application requires substantive tax professional consultation.
How can I estimate my net proceeds before listing?
Substantive net proceeds analysis involves: start with expected sale price from comp analysis, subtract commission at specific listing agreement rate plus any buyer's agent compensation offered, subtract NY State Transfer Tax at 0.4%, subtract NYC RPTT for Queens properties, subtract attorney fees estimated at $1,500-$3,500, subtract expected inspection response typically $2,000-$15,000, subtract mortgage payoff, subtract prorated tax adjustments, subtract expected capital gains where applicable beyond Section 121 exclusion, and subtract pre-listing preparation costs. The specific calculation for any particular sale requires substantive analysis with the listing broker and seller's attorney. Home valuation resources provide property-specific initial analysis; substantive tax professional consultation is warranted for specific capital gains modeling.
By Eric Berman, REALTOR® | The Eric Berman Team at Compass
Eric Berman | Long Island & Queens Associate Broker | Compass
1468 Northern Blvd, Manhasset, NY 11030
(917) 225-8596 | eric@ericbermanre.com | theericbermanteam.com
