Quick to Buy, Hoping to Sell
By MOTOKO RICH
Published: November 6, 2003
WHEN Eliot and Jann Zuckerman put their Upper East Side apartment on the market in January, it attracted a seemingly endless stream of lookers.
Nights, Mrs. Zuckerman and her 12-year-old son, Cody, would wait in the laundry room downstairs or huddle in the car in the garage as brokers showed prospective buyers the place. Sometimes they walked around the block, Cody already in his pajamas. One Sunday afternoon during an open house, the family killed time at a mall in Secaucus, N.J. "It cost us a bloody fortune," Mrs. Zuckerman said, recalling their nervous shopping that day.
Still, no nibbles on the apartment, which had two bedrooms and was in a doorman building ? even after they reduced the price from $695,000 to $659,000. "It was nonstop anxiety every day and every night," Mr. Zuckerman said, sitting on a black leather couch in his new living room on Monday evening. Mrs. Zuckerman interjected: "And nobody ever put in a bid. At one point, I was giving up."
Their distress may be familiar to anyone who has ever sold a house or apartment. But for the Zuckermans there was an added layer of worry: they had already signed a contract and put down a deposit on a larger two-bedroom apartment just two floors below. The last thing they wanted was two places and two mortgages.
The suspense lasted only 10 weeks. The Zuckermans sold their apartment for $622,500 in March and moved in June. Showing off their new kitchen appliances and custom-built closets, Mr. Zuckerman, a real estate lawyer, said, "This apartment was worth taking the risk."
With prices continuing to rise in Manhattan and the number of available apartments falling, more people are hedging their bets by signing a contract on a new place before selling their old. Many want to lock in mortgage rates, which are still hovering at record lows. And given the rapid turnover, they figure they won't have much trouble shedding their current residences.
Of course, there is always a risk that an apartment will sit on the market a little too long, creating financial havoc for households without large savings. Even after a seller secures a buyer, the sale could fall through if, for example, a co-op board turns down the buyer, forcing the seller to start over while juggling two mortgage payments. But unlike the situation a year ago, when sellers worried that economic woes would bleed into the real estate market, many sellers now know that "they are coming out of good situations, and they are not so concerned that their apartments will languish," said Corinne Pulitzer, senior vice president of Heron Residential, the Manhattan firm that helped the Zuckermans sell their apartment.
Reba Miller, president of R. P. Miller & Associates in Manhattan, said that in half her deals in the last six months, the homeowner has bought before selling, a marked increase over previous years. "Owners who become purchasers have more of a concern about where they're going than what they're selling," she said.
Rather than worrying if they are paying too much, buyers now worry that if they dawdle they will lose their dream apartment. In the largest contraction since early 2002, the number of apartments available for sale in Manhattan is shrinking: from 6,058 units at the end of the second quarter of 2003 to 5,224 units on the last day of the third, according to a market analysis by Miller Samuel, a New York real estate appraisal firm. (After the attacks of Sept. 11, 2001, inventories initially spiked as buyers retreated from the market, but when they came flooding back in early 2002, the number of apartments available dipped sharply.) In the most recent quarter, not surprisingly, prices climbed too, to an average of $916,959 from $864,860.
As inventory shrinks, apartments move more quickly. Jonathan Miller, president of Miller Samuel, says it took an average of 137 days to sell an apartment in the third quarter of this year ? five fewer than during the second.
"If somebody wants something, they just act very quickly and decisively," said Marcy Pedas Sigler, a broker at Stribling & Associates in Manhattan. She said she is working on four deals in which the buyers have signed contracts before selling their current residences.
Earlier this year, Susan Ascher, a college marketing instructor, decided she wanted to move from the Fifth Avenue apartment she shared with her husband, Richard, to a place with enough room to entertain their whole family, which includes six grandchildren.
"There was not much to look at," Ms. Ascher said of her desired neighborhood, the East 70's and 80's. So when she found a two-bedroom, two-bathroom apartment with a large dining room just three blocks down Fifth Avenue in a building with a garage, she persuaded her husband that they should jump, even though they were still negotiating with a prospective buyer for their own apartment.
"When I told my friends about it, they thought I was just crazy," said Ms. Ascher, who admitted to spending several sleepless nights. In the end, as a result of delays with their new co-op board, the couple closed on the sale of their apartment before they closed on the purchase of their new one. They are living in a hotel while contractors install new kitchen and bathroom fixtures.
Most sellers don't have the buy-now, sell-later option, because they need money from the sale to finance a down payment. Co-op boards rarely approve a sale that is contingent on the buyers' selling their own place. But for those with access to savings or short-term personal loans, a delay in the sale can mean a smoother move.
"A lot of people are afraid that if they sell first, they will then be homeless because they won't find what they're looking for," said Naomi Davis, an agent who specializes in the Upper West Side for Coldwell Banker Hunt Kennedy.
One couple who came to her, Steven and Linda Bloom, carried two mortgages for two months so they would not have to move twice or accept a place that was less than ideal. The Blooms had been looking casually for about two years while hoping the market would cool off. But when they realized they were expecting a child, their third, they shifted into high gear. In April, Ms. Davis showed them a classic six-room apartment big enough to convert part of the dining room into a third bedroom. They made an offer, gambling that they could sell their old apartment in time to move into the new one.
"It's very nerve-racking, knowing that every month longer it takes, the meter is ticking in terms of carrying two places and two mortgages," Mr. Bloom said. The couple considered reducing their asking price, but passed up a few low-ball offers, figuring that the way the market was going they would find a buyer willing to bid higher and close on the deal before the end of the year. The wait paid off, and the family will move in early December.
For some, buying a new apartment ahead of a sale reflects confidence in the strength of the market. "We felt that real estate was a very good investment," said Barbara Zackman, who, with her husband, Michael, recently bought a $1.1 million apartment with a view of the East River in the same Sutton Place building where they have lived for three years.
But that same confidence led them to be overly optimistic about the value of the apartment they were selling. A renovated one-bedroom, it went on the market in May at $795,000. After two months, the couple reduced the price and finally, after five months of carrying both apartments, signed a contract to sell it for $699,000. The buyer is still awaiting co-op board approval.
Some homeowners are lucky enough to have paid off their mortgages before shopping for a new place. One such couple, Harriet Fraad and Richard Wolff, who plan to close on a West Village triplex today, say they are certain that they can sell their longtime home in New Haven soon enough. As Ms. Fraad, a psychotherapist, put it: "My husband has been wanting to live in Manhattan for about 10 years, and I've been ready to move for about 5 years. So when we finally found what we wanted, we were ready to take the risk."
Marie Sansone Taylor, the couple's broker at Brown Harris Stevens, pointed out that the new apartment offers the office space Ms. Fraad has been searching for since first dreaming of the move in the late 90's.
Indeed, "if they didn't take it," Ms. Sansone Taylor said, "it could be another six years before they found something that worked as perfectly for them again."
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