Buying an apartment in NYC while you are selling your current place in the city may seem like a logistical challenge. How do you manage the financing on a new space when your funds are tied up in the old one? How do you handle the practical needs of moving from one spot to the next with as little stress as possible?
As daunting as it seems, rest assured, it can be done.
“There are a lot of moving parts to manage,” says Joel Dommel, an agent in Corcoran’s East Side office. “That said, a simultaneous buy and sell is something we frequently help New Yorkers do, especially in a market that currently benefits those looking to upgrade their lifestyle.”
The most common scenario is “a trade up, when life circumstances change—you get married, have children and need more space,” says Paul Rosen, a broker in Corcoran’s Williamsburg office. “There are many different ways to attack it, so we present our clients with as many options as we can think of to best strategize what their goals are.”
Are you facing buying and selling at the same time? Here are some ways to make the process go as seamlessly as possible.
Give yourself enough time
To simultaneously buy and sell, “ideally, you’re looking at a minimum of six months,” says Dommel. That may initially seem like a long horizon but buying (or selling) a single condo or co-op “can be a 90-day process alone for the whole application process including approval by the condo or co-op board.” And that 90 days doesn’t include financing.
A six-month window should give you some time to get your current place ready to sell—which could include getting a home equity loan to do repairs or upgrades to capture a higher price when you bring it to market, says Dommel.
Line up financing for your down payment if you need it
If most of your liquid assets are tied up in your current place, you’ll need to find another way to come up with a down payment on your next place.
“If you go to a traditional lender and you have your home on the market for sale, they may not give you a bridge loan,” says Dommel. Short-term loans often have tougher qualifications and higher rates than normal loans because of the risk that you may wind up carrying two mortgages.
If you’re looking to buy a co-op, know that many boards shy away from bridge loans and have other strict financial requirements to ensure you’ll have ample money—an average of at least two-years worth of mortgage and maintenance charges—left over after your down payment of 20-25 percent of the purchase price.
Instead of getting a bridge loan, you may need to refinance your existing mortgage or get a home equity loan to use as a down payment on the new place.
Almost sell your place before you put an offer on a new one
To reduce the expensive possibility of owning two homes simultaneously, bide your time. First, get your down payment ready while you prep your current place for sale and put it on the market. Once you’re close to finalizing a deal, hit the ground running to look for a new place.
If you’re strategic, organized and a little bit lucky, “it’s not uncommon for clients to close on their previous home and their next one within the same 24-48 hours,” says Dommel.
An alternative to buying and selling at the same time
If this all sounds a bit too stressful for you, consider selling your current place first, and moving into a temporary rental. This might be the best option if you need to extract any equity from your current place in order to purchase a new one.
“Many New Yorkers do this because they just don’t have hundreds of thousands of dollars sitting around in their bank accounts,” Rosen says.
Renting for a bit also eliminates having a strict time frame on buying your next place, meaning you’ll have more to choose from. Renting is also a perfect opportunity to test out a new neighborhood or different type of property. After years of living in a prewar co-op, for example, you may find that a modern open-layout apartment is more to your taste (or the opposite).
This approach has its downsides too. Besides having to move twice, you’ll need to find a short-term rental, which can be a task in and of itself. (The good news is you won’t have to search alone: Finding temporary digs between your sale and purchase is something your broker can help you navigate, too, Rosen says.)
Keep in mind as well that the market can change in a New York minute. The further you push out buying your next apartment, the less certainty you’ll have about where the market’s going to be. “You could be exposed to a shift where it can play against you, especially if you’re looking to upsize. There are usually fewer larger properties, since people tend to hold onto them longer,” Dommel warns.
Pro tip: Instead of moving twice, another tactic is to sell and see if the buyer is willing to rent it back to you on a temporary basis.
“We call it pre-possession and post-closing possession, and it’s on the menu of options we talk about,” says Eve Levine, a broker in Corcoran’s Williamsburg office. Her team recently had two closed deals that had both sellers staying in the apartment for about two months, she adds.
Bottom line: An experienced broker is key
There are a lot of choices to make when you’re planning to buy and sell a NYC apartment simultaneously. That’s why having an experienced broker is an invaluable part of the equation.
“We educate sellers and alert them to the roadblocks they may run into,” says Rosen. “We’re here to aid in the process and tailor it to your needs.”
Communication between yourself and your broker is paramount to having this complicated deal be successful, so don’t be shy about interviewing brokers to learn about their experience and how they work, adds Levine.
“You’re going to spend a lot of time with them, so you want someone who knows what they’re looking at, has good relationships with other brokers, lenders, and attorneys, knows how to negotiate, and conducts themselves professionally—but can be assertive both on your behalf and with you so the transaction keeps moving forward,” she says.
Visit corcoran.com today for help selling while buying a new home at the same time.
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