Jumping the gun: Buying before selling can be problematic

Other options open to sellers who want to avoid the risk

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Imagine this scenario: you decide that your current home has outlived its usefulness. You contact your real estate agent who tells you that your home should sell for about $1 million in the current market. You're thinking of trading down to a smaller home for a cost of around $700,000. You've calculated your closing costs and capital gains tax liability to the penny. Armed with this information and with a pre-approval letter from your mortgage broker, you start shopping for your new home. You're well qualified and you'd prefer to buy before selling. You don't want to be left homeless. The perfect replacement home comes on the market. You waste no time getting the property under contract. Then you put your home on the market, confident of a quick sale. Unfortunately, after months of marketing, your home hasn't sold. At your agent's advice, you lower your price. This increases the showing traffic. Finally, an offer is presented. The offer is for much less than you were expecting. Relucta...