Financial Matters

Which Comes First – Buying or Selling?

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Selling to buy an apartment in Manhattan can be extremely daunting. I work with a lot of young buyers who rely on using the funds from their sale in order to purchase their new home.

Going through the motions of selling while searching for and buying a new apartment can be emotionally draining, incredibly stressful, and potentially risky.

People often ask which comes first – buying or selling?

I recommend employing a few smart strategies to jumpstart your process:

  1. Engage with a reliable and reputable broker who will have your home photographed, floor plan drafted, and a listing description ready to go.

 

  1. Be in touch with a New York City real estate attorney who can be readily available. Make sure they know New York City residential real estate laws and are not going on vacation anytime soon.

 

  1. If you’re selling in a co-op, make sure that your broker is vetting any offers and looking for a well-qualified buyer who will get board approval. Although it’s hard not to choose the bidder with the highest price, having a qualified buyer is much more important because it lowers your risk of a board rejection – which could leave you carrying two apartments at once. If you’re in a condo or condop, the process is usually much less stressful because there is no board approval required.

 

  1. While your apartment is listed, it’s important to be looking around for a new apartment to buy. In a perfect world, you’ll find your buyer and your new home simultaneously. In that case, make sure you have your sale contract signed by the buyer first. Don’t sign the sale contract until your purchase contract is fully executed. Last week, I was helping a seller get her apartment into contract. We received a half-signed contract from the buyer. Before allowing my client to fully execute the sale contract (I.E. sign her half of the contract), we wanted to ensure that her new purchase contract was fully executed so she wouldn’t be homeless.

 

  1. In situations where the sale of your existing home is moving a lot quicker than the purchase of your new home, you have the option to move into a short-term rental until you find the apartment that you want to buy. The downside to this is the cost of moving twice, but on the upside you’ve completed your sale and will have the funds in your bank account to spend when you find your new dream home.

 

  1. What happens when the buyer of your home is board approved before you are board approved for your new home? You might be able to negotiate a post-closing possession or lease-back agreement with your buyer. This is where the seller remains living in their apartment even after the closing takes place. This is usually settled between attorneys, with the rent at minimum covering the monthly maintenance and mortgage payments. If your buyer is willing to be flexible with their move-in date, this is a great option for you to consider.  

 

  1. Another factor to be aware of is financing. Securing financing from a bank can impact the timing of your both your sale and next purchase. Sometimes you are fortunate and receive an offer from a cash buyer, which leads to a quick closing. In other instances where you’re dealing with a buyer who needs to obtain financing from a bank, it’s important to keep the buyer on a tight timetable so you don’t end up waiting for financing only to find out that your buyer can’t get a commitment letter from their bank. Ideally, as a seller, you want your buyer to drop any financing contingency in a contract. When a buyer won’t agree to lose their mortgage contingency, a strategy I recommend is requiring a 15-20 day contingency on the mortgage. This means, if for any reason the buyer is unable to get their commitment letter within 15-20 business days, the seller has a right to move forward with another offer. This lowers the risk of the seller wasting days off the market and waiting for the buyer’s financing to come through.

 

Finally, it’s most important to arm yourself with a smart mortgage broker, real estate agent, and attorney who are focused on your two simultaneous transactions. If you’re equipped with the right team, usually all risks are minimized and things work out. 

 

 

Jason Katz joined Modlin Group in September 2014. Prior to Modlin Group, Jason worked at NBC News and NBC Sports for three years where he had the opportunity to develop creative & technical skills in production and digital at the highly accomplished TODAY show and the Olympics.
Attention to detail, confidentiality, and client service are key elements that distinguish Jason in his performance at work. Jason also has a knack for technology and connecting with people. Jason moved to the Upper East Side from Memphis, TN. He attended The University of Maryland where he majored in broadcast journalism. Jason’s interests include music, news, and volunteering with New York Cares.

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