Selling your home while purchasing another can seem daunting, yet it’s more common than you might think. In fact, recent statistics show that over 60% of Americans selling their homes are also in the market to buy. There are plenty of reasons why you could be considering selling your house and buying a new one at the same time in 2025, such as relocating for work or seeking more space to accommodate a growing family.
If you find yourself in this situation in New York City, having knowledgeable legal guidance can make a substantial difference. At Sishodia PLLC, our team of New York City real estate attorneys can help you handle both transactions smoothly and avoid common pitfalls that can complicate the process. We can clarify essential details such as closing costs and tax implications, which are pivotal in making informed decisions when selling and buying property simultaneously. Contact us today at (833) 616-4646 to schedule a consultation.
Closing Cost Statement
The process of buying an apartment in NYC does not end when you finally secure a closing date. There are still some matters that need to be addressed, such as conducting the last walk-through of your condo or co-op apartment and the closing statement. You may not be familiar with a closing statement if this is your first home purchase.
The closing statement summarises the sale transaction and needs to be kept for your records. The closing statement is prepared by your real estate attorney in spreadsheet format and will include the closing costs for your home purchase. This is an important document because it will contain the precise figure for your closing costs. You won’t know the exact amount of your final costs until your attorney has completed the closing statement.
The closing statement should contain all necessary information to determine where the money is going, as well as other details such as:
- The names of both the seller and buyer
- The closing date
- The address of the property
- The location for the closing
Closings can be delayed by up to a day or two. This is why it is important for the closing statement to specify a date.
The Closing Process
The closing of a real estate transaction usually takes between 60-90 days from the date the contract was signed. In NYC, things move more slowly, so expect closing to take place closer to 90 days. The buyer will need to send the attorney the down payment after the contract is signed. The buyer can lose their down payment if the buyer walks away from the contract prior to closing, unless there is a valid reason, such as a mortgage contingency. In New York, the average down payment is 10%. This money goes into an escrow account.
The buyer’s attorney must complete several tasks before closing. First, they must order a title check to see if the seller has any outstanding issues. Unsatisfied liens are the most frequent title problems. It is crucial to resolve title problems and ensure that your purchase is legal.
The buyer’s attorney will also then work closely with the client to fill out any documents required by the lender. The attorney can also help their client calculate how much they owe any lenders or title companies, as well as any third-party entities that are involved in the transaction, such as co-op boards.
On closing day, the real estate attorney will ensure all documents that you sign, such as deeds, tax returns, and mortgage documents, are in order. At that point, the buyer will need to make a payment.
In NYC, there are additional regulations and customs involved in real estate transactions, which can make closings very complicated. An experienced real estate attorney may be able to help you understand the many aspects of the process. This is why it is so crucial to find attorneys knowledgeable in real estate transactions. At Sishodia PLLC, attorney Natalia Sishodia and our team of experienced real estate lawyers can guide you through every step of the process.
Closing Costs Paid By the Seller in New York
If you are the seller, you will be paying closing costs that can run more than 8% of the sales price. This is because the seller is responsible for paying the real estate commission for the sale. The real estate commission makes up the largest percentage of your closing costs as the seller, with commissions typically ranging from 5 to 6 percent of the sales price. This commission is then typically split between the two agents.
In addition, the seller is responsible for any city and state transfer fees. The NYC transfer fee is 1% of the sales price for properties $500,000 or less or 1.425% for properties over $500,000. State transfer fees are an additional .40% or .65% for any properties selling in excess of $3 million.
In those cases when the seller is a foreign national, there is an additional 15% tax withholding known as FIRPTA. To add to the complexity, out-of-state residents also have to take into consideration a mandatory income tax payment at closing equal to 10.9% of the gain.
A knowledgeable real estate attorney experienced in handling sales involving both foreign sellers and out-of-state residents’ sales can guide you on the issues such as withholding (FIRPTA), exemptions, and your options when it comes to withholding certificates.
In addition to New York state-specific taxes, the seller is responsible for their pro-rata share of real estate taxes for the current year and any attorney fees.
Disadvantages Of Seller Paying Closing Costs
When a seller decides to shoulder the responsibility of covering closing costs, they are essentially taking on the financial responsibility associated with transferring property ownership. These costs encompass various expenses, including appraisals, title searches, and legal fees. Sellers choosing to pay closing costs frequently employ this strategy as a beneficial negotiation tactic, potentially speeding up the home sale process and even securing a more favorable offer. However, there are drawbacks associated with sellers covering these expenses.
- Increased Listing Price: When the seller agrees to cover the buyer’s closing expenses, they may choose to raise the home’s listing price to cover this additional financial obligation. As a result, this adjustment can lead to an increased overall cost for the buyer, even though the seller is taking care of the closing costs.
- Reduced Room for Negotiation: When the seller commits to shoulder the burden of covering the closing costs, it can restrict the scope of negotiations opportunities available to both the buyer and seller. This limitation arises because the seller has already made a concession by taking on the closing costs, which might reduce their willingness to negotiate on other aspects of the sale.
- Limited Scope for Upgrades or Repairs: If the seller takes on the responsibility of covering closing costs, they might have less flexibility to offer other concessions, like home upgrades or necessary repairs. This limitation can restrict the buyer’s capacity to negotiate for extra benefits or improvements.
- Complicated Documentation: The process of incorporating the seller’s payment of closing costs into the purchase agreement can be intricate, necessitating additional paperwork and documentation. This intricacy can prolong the time and effort needed to finalize the sale.
- Potential Appraisal Challenges: The involvement of the seller in covering the closing costs can pose potential appraisal difficulties. This is because the appraiser must take into account the higher listing price, potentially resulting in an adjustment to the assessed value of the home. Such adjustments could complicate matters if the appraised value ends up being less than the initially agreed-upon sale price.
When it comes to the disadvantages of a seller paying closing costs in real estate transactions, navigating the complex landscape of New York City’s property market can be particularly challenging. However, in such circumstances, a skilled New York City real estate lawyer can be your invaluable guide, helping you make informed decisions and avoid potential pitfalls seamlessly. Contact Sishodia PLLC today to schedule a consultation.
| Tips and Considerations | Details |
|---|---|
| Break Down Your Goals in the Beginning | Start by clearly defining your goals and writing them down to stay organized and focused throughout the process. |
| Prepare Your Current Home First | Preparing your current home for sale involves decluttering, depersonalizing, and making necessary repairs, which can take several weeks or months. |
| Consider Contingency Clauses | Explore contingency clauses when making an offer on a new home, allowing you to back out if you can’t sell your old home without major consequences. |
| Avoid (or Cope With) These Common Pitfalls While You Move | Be prepared for challenges like needing temporary housing if your new home isn’t ready after selling the old one. Communicate your needs with your real estate team. |
Closing Costs Paid By the Buyer in New York
Buyers should expect to pay closing costs ranging from 2 to 5% of the purchase price of the property, depending on their mortgage terms and property type variables. These will include
- Lender’s fees, including any costs associated with the mortgage financing for the property, such as prepaid interest, appraisal fees, survey costs, and tax escrow
- Their pro-rata share of property taxes for the current year
- Transfer taxes if the purchase is a new build
- Mortgage recording tax
- Attorney’s fees
- Condo or co-op building application and attorney fees
- Title insurance premiums
- Mansion tax on any properties with a purchase price of $1 million or more
Depending on the type of mortgage and the market, closing costs can be negotiated between a buyer and seller, although in a very hot real estate market, the seller doesn’t usually have much incentive to do this.
Can I Afford to Buy a New Home Before Selling My Old One?
Buying a new home in New York before selling your current one can be difficult, especially when finances are tight or timing is uncertain. Many homeowners consider this step when they’ve found the right property and don’t want to risk losing it, even though their current home hasn’t yet been sold. The pressure of balancing two properties at once can create significant stress, so it’s important to consider what this process may involve.
- Financial Requirements: Lenders typically look closely at a borrower’s financial profile in these situations. Having sufficient income, manageable debt, and enough savings to handle two mortgage payments can make a difference in getting approved.
- Short-Term Loan Options: Some homeowners turn to bridge loans to help cover the cost of a down payment on the new property. These loans are temporary and come with higher costs, but they may provide short-term relief during a transition. Others may consider using a home equity line of credit if they qualify and have enough built-up equity in their current home.
- Market Conditions: Market activity in New York influences how quickly a home sells. If demand is high and comparable homes are moving fast, it may feel more comfortable to buy first. But when the market is slower or less predictable, carrying two properties at once can become financially draining.
- Carrying Costs: The added burden of two sets of property taxes, insurance, and utilities can take a toll. For many, managing these responsibilities without a clear end date can feel like a heavy burden.
- Support and Planning: A real estate agent and financial professional can offer guidance based on your specific situation. With their support, it becomes easier to weigh your options and move forward with greater clarity and confidence.
Buying before selling in New York is possible, but it’s not a decision to make lightly. With the right support and careful planning, you can reduce the stress that comes with juggling two homes and avoid financial missteps that may affect your long-term goals.
Getting the Guidance of a New York City Real Estate Lawyer
When you are purchasing a piece of real estate in New York City, it is always advisable to have the advice of an NYC real estate attorney to ensure that everything is in order and you are not paying for anything that is not your responsibility. An experienced real estate attorney will work with you from contract to closing to protect your legal rights and prepare you for all your contractual and financial obligations and closing costs.
At Sishodia PLLC, our skilled team of New York City real estate lawyers is with you each step of the way to help your transaction go smoothly and avoid surprises. Whether you are a buyer or seller, we can help. Call us at (833) 616-4646 or contact us through our online contact form to schedule a free consultation.
from Sishodia PLLC https://sishodia.com/how-to-sell-and-buy-a-house-simultaneously-in-2022/
No comments:
Post a Comment