An Oakland, Calif., couple had wanted to change their lifestyle for years. Like many people who want to make a move from the home they own to another they hope to own, this couple put the cart before the horse. They started by researching what it would cost to buy the next home before investigating how much cash they would net from the sale of their current home.

When they consulted with a local real estate about the probable sale price of their current home, they discovered that it wouldn’t sell for enough to enable them to afford the lifestyle they envisioned. So, they delayed their relocation plans. They hoped that the housing market would improve and their house would sell for more during the next year.

Unfortunately, the resale market in their area took a downturn, putting them further away from their dream. Fortunately, however, they did not buy the dream home last year before selling their current home. This would have been a risky move financially.

HOUSE HUNTING TIP: A risk of buying a new home before selling the current home is that you may be inclined to base the list price of the home you’re selling on what you need to sell for and not on what the market will bear. If you fall into this trap, you could end up listing at a price that’s too high for the market. After months on the market with no offers, you’ll have to drop your price to attract buyers’ attention. You could end up selling for less than what your home would have sold for if it had been priced right for the market to begin with.

The couple mentioned above has decided to wait no longer for the market to give them a "go" sign. They are ready to get on with their lives. They have decided to sell their house now. It’s impossible to time the real estate market, but it is possible to minimize your risk when buying or selling a home.

Another couple came close to making an offer on a home that was located in a better school district. When they looked at the cost of carrying two homes, which was a likely prospect if they bought before selling, they decided against buying first. If their current home took a long time to sell or if it sold for less than anticipated, they could find themselves over their heads in debt.

Instead, they are planning to sell their current home first. If need be, they are prepared to rent until they can find a home to buy.

Contingent sale offers still aren’t popular in some niche markets. In these desirable markets, sellers are able to sell if they price their home reasonably for the market and properly prepare it for sale. Unless you can afford to own two homes and verify that a lender will qualify you to do so, you need to sell first or stay put.

There are a couple of ways to buy time to find the next home. Sellers are more receptive to offers from buyers whose home is sold, but not yet closed. This is especially so if all contingencies have been removed.

Also, you may be able to rent back your current home for a time after closing in order to minimize the possibility of making an interim move. However, there are benefits to renting an interim home. One benefit is that you don’t feel rushed to buy.

THE CLOSING: Also, if prices are declining, you might pay a lower price in several months than you would now.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer’s Guide," Chronicle Books.


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