With the ups and downs of the real estate market in New York City since the pandemic, those who have Battery Park City homes for sale or who are looking for homes in this or other Manhattan neighborhoods may be wondering if now is the time to make a move and what they can expect during their buying or selling journey. Those who are not first-time homebuyers will have an added layer of complication as they will be in the position of needing to buy and sell homes at the same time. Fortunately, with some pre-planning and by working with an experienced Battery Park City real estate agent, you can increase your chances of success and keep anxiety levels low when making your move. Here are some tips that will help you successfully buy and sell simultaneously in Battery Park City.
Understand if you will buy or sell first
Though you can list your house and start looking for new Battery Park City homes at the same time, it’s highly unlikely that you will have an offer accepted on a new home and sell your current home at exactly the same time. The gap between the two could be as little as a few days or as large as several months. Once you understand this, you’ll be better able to pre-plan for the challenges that come with buying or selling first.
Evaluate your finances
Even when the timing goes your way, the process of buying and selling simultaneously is not inexpensive. If the timing is not ideal, you could find yourself paying for two mortgages, having to come up with large chunks of cash, and experiencing other high expenses. Before you decide to list or start looking at Battery Park City homes for sale, sit down with your financial planner and go over your full financial picture. How much do you have in savings that you can access if needed? Do you have any qualified retirement plans you can borrow from and, if so, how will this affect your financial future? You also need to look into your credit and see if your score is high enough to qualify for a mortgage with low interest. In most cases, you will need a score of at least 620 to get a conventional mortgage and a score in the high 700s to qualify for the best rates. After going over all the numbers, you may find that it makes more sense to sell your home before you attempt to buy or hold off on both until you can strengthen your finances.
The challenges of buying first
If you find a home you want to buy before you successfully sell your current home, the main challenge you will experience is financial. Without being able to access the equity in the home you own, you will need to come up with cash for your down payment and closing costs. If you are buying one of the median-priced Battery Park City homes listed at $1.2 million, you will need $240,000 for a 20% down payment and another $36,000-$72,000 to cover closing costs. If you don’t have this much cash in your bank account, you can consider the following options:
- Taking out a bridge loan. A bridge loan is a short-term financing option that buyers of Battery Park City homes can take out to help cover costs. This type of loan is usually secured for a term of six months to a year. Though it carries a higher interest rate than some other options, you can avoid paying them for an extended period by paying off the balance of the loan when your home sells.
- Obtaining a HELOC. Home equity lines of credit allow you to tap into the equity in your current home before you sell it. These require less documentation than other types of loans, and payment for a HELOC is typically interest-only for the first 10 years.
- Using your 401(k) account. If you have a 401(k) retirement account that allows you to borrow from it, it could be a cost-effective solution to access the cash you need. In many cases, you will be able to take a 401(k) loan without penalties. If you are considering this option, talk with your financial advisor to ensure it makes sense for your overall financial goals.
In addition to supplying a down payment and closing costs, you will also have to manage two monthly mortgage payments and maintenance on two separate Battery Park City homes. Another option would be to rent your current home for a short period of time until you find an interested buyer.
The challenges of selling first
It may seem like the ideal scenario to sell your current home before you find one you want to buy, but there are still some challenges involved in this scenario. The main issue is that you will need to find a place to live until you settle on one of the Battery Park City homes on the market, and you may feel pressure to buy a home that doesn’t really meet your needs just so you have a place to live. In this situation, you can also consider a leaseback agreement, only this time you can offer to rent your sold home back from the new buyer. Another option is to find a home in the area you can rent while you continue your search for the perfect buy.
Are you ready to start the simultaneous buying and selling process? Work with Battery Park real estate agent Simone Malferrari who has experience with this situation to increase your chances of success and ensure a smooth transition. Reach out today for expert guidance and a low-stress experience.
