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One of the most common scenarios that a Realtor will come across is a client who wants to buy a home, but have an existing house to sell first.  This presents an interesting situation to which there is no perfect answer.  A buyer who has a home to sell first, potentially has three options:

• Write an offer to buy a new home which is conditional upon the sale of the existing home
• Sell the existing home first and then write an offer to buy a new home
• Buy the new home then list the exiting home for sale

Let us begin by looking at the pros and cons of the first option.  When we write an offer that is conditional upon the sale of the buyers existing home, we typically use a "time clause" in the offer.  This means that we write a regular offer, but ad in a clause that allows the buyer time to sell their exiting home first, before firmly committing to purchase the new home.  In order that such offers do not needlessly tie up homes on the market, a 72 hour time clause is used.  The effect of the time clause is that if another buyer comes along and writes an offer (which is accepted) on the home, the original buyer is given 72 hours to firmly commit to buying the home, or else the new buyer takes first priority in the purchase.  The pro to buying a home using the time clause method is that the buyer is ensured that they can buy the "right house" before committing to sell their existing home.  The cons are that, in general, time clauses slightly weaken the buyers bargaining position and may (we must stress "may") lead to a slightly higher purchase price.  A second con is that the buyer may spend money on a building inspection, site survey, appraisal, etc. only to be "bumped out" by a new buyer.  Finally, there is always that risk that a better house comes along, but the buyer is locked into a contract already. 

The second option also has its own set of pros and cons.  When we sell the existing home first, the buyer is put into a stronger negotiating positions on their purchase, than if they had used a time clause.  This is certainly a "cleaner" way, than the first option, to facilitate the sale/purchase process.  The downside to this option is that once the buyer's home has sold, they will have a finite time period to find the perfect home to buy.  There is a bit of risk involved in this, as there will always be some chance that the buyer cannot find a suitable home. 

The third option is likely the best option when it is available to a buyer.  However, the buyer needs to be in a position financially to be able to buy without selling their existing home first.  The upside is that there is no weakening of negotiating position due to the presence of a time clause, and there is no time limit on the buying process.  The obvious downside is the financial risk of owning two properties, if the buyers existing home experiences difficulty selling. 

When it is all said and done, there is no perfect options for all situations.  Buyers that find themselves in the situation where they want to buy and sell, should examine their own circumstance and weigh the pros and cons of each option, given their particular circumstance.