'Tis the dilemma of many a home seller . . .

To sell, then buy, or buy, then sell?

For many sellers there is the obvious "safehaven" concern. "Okay, we want to sell our house," they say, "and our lovely home will surely sell within two weeks! But then where will we live, where will we go, what will we do!!!???"

The first step then becomes to dash off blindly in search of the perfect replacement home. Days of scouring the Internet, driving neighborhoods and scheduling appointments to find the "best nest" or to see "what's out there" . . . before even dusting the doorjam or plumping the pillows to get the current home ready for sale.

The little hitch -- in this otherwise plausible process -- comes when that dreamy, must-have dwelling is uncovered, and the issue suddenly becomes trying to figure out how to buy it without selling the other home first. Oops! We have a small problem.

It's usually at this point that the "sage" strategy -- based most likely on the advice of some freelance real estate columnist, a handy DIY real estate book, or good ol' Uncle Bob -- of just making an offer "contingent on the sale of their current home" emerges from the darkness of desperation.

Fair enough. This can work, but . . .

Quick reality check. 

In the current real estate market (at least here in Pickens County and North Cherokee County, GA), a home is unlikely to be sold in two weeks. Or two months for that matter. Competitive pricing, appropriate cleaning / staging / repairs, and a top notch marketing program are going to help. But, inventory levels being what they are, there is a LOT of competition, particularly from banks. So, realistically, plan on several weeks on market. Some price points and areas may be looking at an average days on market of six-months or more. Beyond that, many purchase agreements fall apart before consummation. Make sure your agent covers these little "details" with you before you decide anything about submitting contingency offers prior to even listing your home.

Offering with a contingency requires some level of assumption. Not just that your home will sell within a certain period of time, but also that it will sell at the price you have in mind. Realistically, that may not pan out as planned. Price changes happen. Be sure that you have accounted for this when making an offer!

Even if you're comfortable that yours is the coolest, shiniest, best priced home on the block, keep in mind that the person you're submitting an offer to probably doesn't know that, (or care). To them your offer is "iffy". Real estate transactions are all about negotiation, and you want to be holding as many good cards in your hand as leverage when you sit down at the table. Financial ability to close (preferably quickly) is a good card; some might argue it is the Ace of Spades on the buyer's side. When you make a seller an offer to close at some distant point in the future, on pure speculation that you will have your home sold for your price and terms by then, you can forget about asking the seller for much along the lines of concessions in their price or terms . . . if they'll even give the offer serious consideration.

For a seller, my opinion is that if a contingency offer is received in which the buyer does not yet have a purchase contract in place to sell their home, or worse, have yet to even list their home, there is little advantage to accepting such a vague, long term contingency, based on "possibilities".  In these situations I strongly recommend to seller clients of mine that, if they do decide to accept, they at least require a "kick-out" provision be included in the agreement to remove the contingency in the event of another acceptable offer. Even with a kick-out included, the seller loses ground through the likelihood of reduced showing activity while the home is listed as under contract in the MLS, so staying away from the contingency altogether may be best, in my opinion. Chances are, if the seller's home is still on the market, the potential buyers will be back when they do sell their home anyway. In the meantime, the seller should at least keep marketing it to other potential buyers. 

For the buyer still waiting to sell their home, little is gained in obtaining a contingency contract with a kick-out  If another acceptable offer is received by the seller, the buyer is pretty much back to where they started.  On the other hand, if the seller doesn't receive any other acceptable offers, the home will still be available when the time comes, so why not just wait and have a better bargaining position?

A contingent on sale clause works better when the buyer's home is actually under contract of sale, under which time frames become more clear and the proposed purchase seems slightly more certain. Even here, from time to there may be three or more sales lined up, all contingent on the sale of another property somewhere else, and if one link in this chain snaps, all can fall apart, disrupting the lives and plans of many. Both buyers and sellers need to consider the "what-if" of what they will do if there is a breakdown somewhere to trigger such a domino effect . . . with all the emotional and financial ramifications. Approach with caution.

I generally suggest, as Priority #1, taking the necessary steps to prep, stage, price and list your home for sale. You'll find a home when the time comes. Seriously. If not, you may have to find temporary accommodations until you do, but that's just a reality of selling. Devoting too much time and energy to home hunting before listing your home or getting it under contract is counterproductive, unless you have the resources or financing to buy what you find without selling first.

With growing inventory, increased number of days on market, and reduced prices, it is easy to understand the frustration of sellers wanting or needing to move, and the anxiousness of potential buyers to take advantage of great rates and low home prices, but the fundamentals of buying and selling a home haven't changed that much. Basic steps still have to be taken. Tossing out weak contingency offers like leaky lifeboats in a stormy sea is not likely to help anybody, or achieve anything.

Hopefully those in the real estate industry will provide the sound guidance needed by buyers and sellers when making such significant decisions in their lives.

[NOTE: There are clearly some situations where contingent on sale clauses are effective or necessary, as I'm sure many out there will be quick to point out. The above suggestions are my opinion only, based on a specific set of circumstances, and are not intended to replace or counter any advice provided by professional representation or legal counsel.]