You've planned carefully so that you'll be ready to close on the apartment you're selling just as you take possession of the apartment you're buying. Even though the new place isn't yours yet, you've already begun renovating and decorating it in your mind's eye. Then you get the bad news that a higher bidder has snatched "your" home out from under you. Unfortunately, it's too late to decide not to sell the co-op you live in. There's no turning back and the likelihood of finding another great apartment seems unlikely. Even worse, you begin to worry that you and your belongings will wind up out on the street or camped out in a relative's guest room. What are your options and are there any steps that buyers who are also sellers can take to avoid this and other nightmarish scenarios?

A Delayed Closing

"I was selling to buy," says Manhattan resident Joel Sesser, who thought he had planned for every contingency in order to ensure a smooth transition. Sesser sold his two-bedroom, two-bath apartment in a 60-unit co-op on Central Park South in order to purchase a two-bedroom, two-bath condo in a 175-unit building off Columbus Avenue. "I closed on the sale of my co-op in late March 1998, and I already had the new apartment lined up. I wanted to coordinate my closing dates so that they would coincide," he explains. Saying that things didn't go as planned is an understatement. The first obstacle was when Sesser discovered that the seller of the condo was a foreign corporation and that he was going to have to deal with long distance communication; although the principals of the corporation were not in New York City very often, they insisted on handling things personally rather than through a power of attorney. This slowed the process down considerably.

"Then, during the closing, which was in mid-August, we ran into another problem," says Sesser. "The franchise taxes (a state tax levied on foreign corporations that own local real estate) had not been paid for several years to the tune of $30,000," he explains. "The seller, who was alarmed to hear this news, refused to put money in escrow to cover the amount and walked out of the closing." Since the tax problem would take a while to straighten out, the closing was adjourned and re-scheduled. Ultimately, the seller escrowed the money with the title insurance people so that in the event taxes were outstanding, money would be available to resolve the debt.

The Apartment I Want

Then, when Sesser finally closed on the property in late August, a whole new set of problems began. "We had taken our designer to see the new apartment before we owned it and he had drawn up renovation plans; however, the managing agent of the condo would not entertain these plans until we owned the apartment." Unfortunately, what Sesser's designer had seen as cosmetic changes, the managing agent viewed as a substantial renovation requiring the building architect's sign-off as well as Department of Buildings authorization. These developments set back the renovation schedule.

Sesser, who has been living in a furnished rental since mid-March, finally got the green light at the end of September. "I've been living in a small, one-bedroom without my things. I'm paying lots of money for storage and the rental plus meeting all the expenses for the new apartment. "I thought we would sell, buy and renovate in three to four months. This apartment is the apartment I want, but I underestimated the aggravation. It makes me feel foolish. I've done this before, and I should have known better."

Committed to Buy

John Ginsberg says he and his wife Kathleen wanted to make sure that they had the apartment of their dreams lined up before they sold the one they were living in. "It was when we went to contract on a three-bedroom co-op in a 130-unit building on the Upper West Side that we decided to sell. We loved the new place and were committed to buy it, whether or not we could sell the other one," says Ginsberg, whose family was currently living in a two-bedroom in a 32-unit co-op also on the Upper West Side.

It was a seller's market, and the seller didn't exactly make things easy for the Ginsbergs. "In fact, we weren't sure we would get the apartment," he says. "The seller was able to raise the price about $35,000. Then she only accepted bids from people who were willing to strike the standard contingency clause from the contract. This clause allows you to get out of the deal for three reasons: board rejection, mortgage rejection or if you can't sell your home," explains Ginsberg. "Because the clause was struck, my mortgage broker had to put together a plan B to prove I would be able to afford to buy the new place if the sale of my old apartment fell through. In the seller's mind, she totally separated the two deals," he adds. "The fact that there might be delays with the sale at our end should have no effect. She expected to close on the exact date on the contract, even though she had our deposit money ahead of time."

In order to "bridge" the time in between closings, while the money they need to purchase the new place was still tied up with the old apartment, the Ginsbergs took out a home equity loan. According to Ellen Bitton, president of Park Avenue Mortgage, a mortgage brokerage firm in Manhattan, anything that bridges the transaction between two apartments can be considered a bridge loan, including a home equity loan on the old or new property and a margin loan on stocks or securities owned.

Another way to achieve a bridge is to "cross collateralize" two properties, adds Bitton. In this scenario, the lender who you approach to buy a new property says "we will give you $300,000 instead of the $200,000 you need for your new purchase." The extra $100,000 serves as a bridge. The lender uses your first apartment as collateral on the loan. When it gets sold, you pay back the $100,000 to the lender. "Anyone who ventures into a bridge loan of any sort should be prepared for the downside, which is the possibility that the sale could fall through," says Bitton. "You should check with a financial advisor or accountant to make sure that you would be able to cover both payments if there is a snag in your sale."

Like Playing Musical Chairs

When Michele Galen and her husband Mark Sheridan sold their home, they didn't close on the new place for four days. They and their two small children had to stay with friends and family in the interim. On top of that, the move cost them double because they had to put all their belongings into storage. "There were three parties involved," explains Galen. "The seller of our new house, the buyer of our old house and us. Two of the parties got everything coordinated. The buyer of our house sold her house and closed on our house the same day. The seller of our new house got out OK, but the timing didn't mesh with us. It was like musical chairs. When the music stopped, we were left standing."

According to Galen, the bad part was that it was like moving twice. "We hired movers who packed us up and then unpacked us at the storage facility. Then we had to be packed up and moved again. It was two complete moves and the cost of moving was doubled from $1,500 to $3,000." Galen's advice to other buyers who are also sellers is to have the attorney include a Use and Occupancy Agreement or some other clause that will ensure they don't wind up with no place to live, even if only for a few days. In Galen's case, she had only a verbal agreement with the seller who later decided she could not move the closing date to accommodate Galen and her family because it was August and she would have difficulty rescheduling the movers during their busiest season.

A Temporary Address

According to Corinne Pulitzer, senior vice president at Greenthal West Residential Sales Corp., a real estate brokerage firm in Manhattan, sometimes the seller will accommodate the buyer's timetable by agreeing to a delayed closing that occurs after the contract is signed and board approval is obtained. However, if this can't be arranged, mini-storage is a popular solution that solves the problem of where to stash all that stuff. "If you're looking, and a great deal comes along quickly, you can get great rates for short-term storage," says Pulitzer. "And, when you're trying to sell, your apartment will show better if there is less clutter."

In terms of where to stay, temporary rentals can be very expensive. Furnished rentals often require a minimum of two months stay and cost top dollar, so you need to shop around. Most co-ops, if they allow sublets, have a minimum rental requirement of three months to one year. Some people go to a hotel, but this is even more expensive and only makes sense for a two to six week interim. But closings can be so tricky that even the professionals sometimes get stuck. Marlene Steiner, a vice president and broker at The Corcoran Group, a real estate brokerage firm in Manhattan, was left scrambling for a place to stay in between apartments recently.

"I sold and closed on my old place several months before my new apartment was ready. I am now homeless with my personal belongings all over Manhattan including my two cats," says Steiner, who warns that it's almost always impossible to ensure the transition between selling and buying homes is seamless. "As a broker I've often said, 'this time it will be different.' But even though I know all the pitfalls, something always seems to come up. All I can say is, stay in your home as long as possible, and find a relation or friend who likes pets, if you have them."

In Steiner's case, she didn't want to hold up her buyers because they were paying the price she had asked and they were relocating from another city. "If you have a fabulous apartment on Fifth Avenue, and everyone is panting for your apartment, you can say, 'Look, I'll leave when I'm ready.' But, in other situations, too many demands can undermine a good deal. I didn't think my situation would be as dire as it is, but when you're having renovations done to a new place, there are lots of different disciplines involved." For example, in the bathroom alone, the shower doors, tiles, faucets and hardware may be coming from different sources. It's hard to anticipate delays.

Expert Legal Representation

Marilyn Harra Kaye, president of Prudential MLBKaye International Realty, a real estate brokerage firm in Manhattan, says, "Most problems come when people don't have proper representation. Hiring a real estate attorney can help you avoid 2,001 problems from unclear titles to delayed closings to tax liens. A good lawyer should be able to get you extensions, similar to the 'time is of the essence' contract used in commercial deals. If you have penalties for every day of delay, there tends to be more movement. As a seller, you should be able to get extensions. A buyer should also be able to."

Kaye also recommends paying extra for a moving service where your household is never unloaded from the van. After your belongings are packed up on moving day, the storage portion of the truck is disconnected and kept in the warehouse until your new home is ready for occupancy. Sometimes the two closings simply can't be coordinated. "In these situations," says Kaye, "I suggest that the client try to get away for a few days to enjoy themselves."

But to those stuck in the middle, that may sound like wishful thinking.