The Buy First / Sell First Dilemma

Unfortunately, the smooth transition from selling one house and buying another involves more luck than science. Do you list your home and risk selling it before you have a new one to move into? Or, do you buy first, produce a costly down payment, and then nervously wait to sell your home; praying all the while that you won't get burdened with two mortgages.

Neither scenario paints a perfect picture, but there are measures you can take to help get you through this difficult situation.

Conditional offer: When buying first, a common strategy is to place a contingency clause in the offer; whereby stating the purchase is conditional upon the sale of your current property, within a specified time. Not fool proof, a conditional offer has some disadvantages. It runs the risk of being rejected by the seller for a more favorable unconditional offer. Also, your offer remains in place until the end of the period you specify, and if a better deal comes along in the interim, you have to wait until this offer expires before you can go for it.

Be prepared: As soon as you have the vaguest notion that you want to move, start getting ready. Begin cleaning out the closets, de-cluttering, and make a list of all the necessary repairs and start whittling away at it.

Enlist a realtor: Make an appointment with some real estate agents and find one that you feel comfortable working with. The agent will give you a good idea of the selling price you can realistically expect, so you can determine your buying range. Once that is decided, the two of you can begin looking for your dream home.

Get off the fence: Decide whether you will simultaneously list your home and shop for the new one. If so, you may risk buying the new place, and having to carry two mortgages because the existing home is not sold. Do you have the emotional and financial well being to deal with that situation? If so, begin working on a game plan to help minimize the risks and stress in this situation.

Call your happy bank manager: Contact the bank, explain your situation and explore your options regarding a bridge loan or home equity loan to help you finance a down payment for the new place.

Minimize delays: Is your home an easy sell, if not, determine what steps need to be taken to prevent selling delays. Are you listing it at a realistic price, or are there any unique features about your home or repairs needed that may inhibit a quick sale?

Selling first has its perks: If lending requirements demand that you sell first, this option does come with some benefits. At least when you sell your home first, you'll know exactly what price range you can buy into. During negotiations, you'll be in a stronger position to place an unconditional offer, which is much more likely to be accepted by the seller than an offer that has a contingency attached to it.

How do you get along with your mother-in-law?: Be prepared for the possibility of moving out of your house sooner than you'd like, and start looking into alternate housing arrangements. Explore the possibility of bunking in with a friend or relative, or research the availability of furnished, short term rentals. Acquaint yourself with the pricing for storage facilities in your area. Many moving companies will offer a storage arrangement as well.

A home transaction can be an overwhelming, stressful situation, but by having your home ready for sale and knowing your options, you'll be better prepared and feel more in control. You'll be glad you did when the unexpected happens; especially in the event that your dream listing suddenly appears and you are faced with the choice to buy first or sell first!