The residential real estate market is a complex dance, and many homeowners face the reality that they must both buy their new home and sell their current one simultaneously. The coordination of a purchase and a sale is a daunting task, especially in New York. Whether you're upsizing, downsizing, or simply relocating, the intricate balance required to orchestrate these transactions can be a source of stress and uncertainty. In this article, we will explore the obstacles that arise and provide strategies to overcome them.
Factors to Consider
The most important factor to consider is whether it is necessary for you to sell your current home in order to buy a new one. In an ideal situation, home buyers have the ability to purchase their new home before closing on their existing one. This has several advantages. Firstly, it allows buyers to make offers on homes they like without the condition of selling their current home, which makes their offer stronger as it eliminates additional variables that could potentially cause the purchase to fall through. Sellers prefer a more certain, straightforward and expedited transaction. Secondly, coordinating the closing dates becomes more complicated, especially in areas like New York where the time from contract to closing is longer compared to the national average. Unfortunately, purchasing without selling first is not a reality for many.
An additional factor to consider is whether it is a buyer's or a seller's market. This factor is crucial as it determines the level of difficulty and time required for each side of the transaction. In a strong seller's market, it is advisable to first find your new home, get an offer accepted, and then put your current home up for sale, knowing that you will find a buyer quickly. On the other hand, in a buyer's market, it is recommended to prioritize getting your current home into contract before proceeding with finding a new home. In a seller's market, it is also challenging to have an offer accepted if it is contingent on the sale of your existing home. When a seller has multiple offers to choose from, such a contingency makes the offer less appealing compared to other similar offers. Currently, the Long Island real estate market remains in a solid seller's market territory, where multiple offers on appropriately priced homes are the norm. This makes it extremely difficult for buyers to win bidding wars when there is a home sale contingency. Home sale contingency clauses are far more palatable to sellers in a buyer’s market where the offer is most likely to be the only option.
See the status of the current Queens market here.
See the status of the current Nassau County market here.
See the status of the current Suffolk County market here.
The Synchronized Shuffle
One of the primary difficulties in managing both transactions concurrently is the synchronization of timelines. Ideally, you want the sale of your current home to align seamlessly with the purchase of your new one. However, delays in either transaction can create a domino effect, causing a cascade of complications that may leave you in limbo. Delays in financing, missing certificates of occupancy from a town or village and title issues are all common and can occur on either side of the transaction. Most real estate sales contracts on Long Island use “on or about” language that enables either party to delay the closing for over a month. This can be advantageous if you are looking to delay either side of the transaction in order to synchronize closings, however either of the other parties in the transaction can also delay the closing. Finally, most contracts will allow a “post possession occupancy”. This allows the seller to close on their existing home and rent that home for a few days awaiting the close on their purchase.
Tips for Success
1. Thorough Planning: Start with a comprehensive plan that outlines your financial capacity, desired timelines, and potential backup options in case of delays or setbacks. For example:
- If finances permit, consider creating an overlap period where you own both properties for a brief time, allowing for a smoother transition. Your attorney can help with this by negotiating “on or about closing” dates that make this possible.
- Pre-arranging a temporary place to live just in case your purchase takes longer than your sale.
- Ensuring your sales contract has a post possession occupancy clause.
2. Consult Professionals: Engage with experienced real estate agents, financial advisors, and legal professionals who can provide guidance and expertise throughout the process and can successfully coordinate all of the necessary moving parts.
3. Flexibility is Key: Be prepared to adapt to unexpected challenges. A flexible mindset can help you navigate unforeseen circumstances more effectively.
Buying and selling a home simultaneously is a complex feat that requires careful planning, financial acumen, and emotional resilience. While the challenges are undeniable, with strategic preparation and the right professional support, it's possible to navigate this intricate process successfully. Using real estate professionals that understand the difficulties and can proactively address them will increase your chances of a smooth transition into your new home.