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Resist the urge to buy new house before you sell


Are you drawn by the lure of low mortgage rates? Do you sense that it's time to trade your home for something bigger, newer, or more charming? Then take the advice of experts and sell your home before you buy.

"Selling first allows you to step forward with the mental assurance that you won't have two homes when you really want to own only one," says Dorcas Helfant, president of the National Association of Realtors.

For emotional reasons, most homeowners strenuously resist the notion of selling before they buy.

"Their biggest fear is that their house will sell and they'll have nowhere to go," observes Irene Waltemeyer, a Bel Air sales manager for Prudential Preferred Properties.

But such instinctive fear of being without a home, or even a nice home, has little basis in fact.

"There are tens of thousands of homes in all metropolitan areas and unless you've got your heart set on a specific address, you're going to find comparable properties all over the area," says Daryl Jesperson, a senior vice president with the RE/MAX International realty chain.

Besides, by selling your house before you buy, you'll have the comfort of knowing exactly how much money you'll be getting out of the sale. And as a buyer with cash in hand, you'll be in a much stronger bargaining position.

"By selling first, you have a nice, clean transition to the new home rather than something that becomes very clouded," Mr. Jesperson says.

If you buy before you sell, you could be forced to carry mortgage payments on two houses. It could take far longer than you imagined to unload your house, and you may have already

committed to buying the second property.

Your financial statement may show that you have the means to keep up both payments. But who wants to liquidate a nest egg to support a vacant house?

Now, many people believe there's a best-of-both-worlds solution for the homeowner who would rather buy before he sells. Their idea: You can put a sales contract on a new house as long as the contract notes that you're not obligated to go through with the purchase until you have sold your home.

But in a market where homes are moving briskly, many sellers will pass up a contract containing such a contingency.

Even if they get less money for their property, they'd prefer a sure-bet buyer to one who needs to sell a house before committing to close the deal.

Of course, there's a buyer's market in most communities these days.Chances are good you'll locate a seller willing to take your contract -- even with strings attached. "In a market where property is moving very slowly, people think a contingent buyer is better than no buyer," Mr. Jesperson points out.

Still, the contingency clause could wind up hurting you.

Suppose you wait and wait and your house doesn't sell. Along comes another buyer to compete for the new house. The way contingency clauses read, the new buyer could bump you aside unless you can prove that you're both willing and financially able to compete with his offer.

Not only could you miss your chance to buy the new house, you could wind up having wasted money.Among other things, you could spend money needlessly for appraisal and inspection reports on the property you intended to buy.

"There's heartbreak in contingency contracts," says Irene Waltemeyer, who adds that a large proportion of such deals fall apart.

For those seeking to buy the best possible house, while avoiding complications, realty specialists offer these pointers:

* Delay searching for a new house at least until you've put your home up for sale.

You may think there's no harm in looking before you're ready to buy. But experienced real estate people note that, time and again, a casual search turns into serious interest in a property.

Ideally, you won't look for a new house until you've deposited the proceeds from your home sale at the bank.

Still, if you're one who yearns to visit the grassy far side of the slope before committing to move there, you can compromise by waiting until your home is on the market.

It can take weeks or months to prepare a home for market -- a process involving tasks ranging from painting to pricing to advertising. If a "For Sale" sign has been posted on your home, chances are you're gaining a feel for what your property will bring. As a result, you probably won't be drawn to a new house that's outside your reach.

PD * Consider selling your home with a special contract clause that

gives you time to look over the field before the sale is consummated.

Some people are pickier than others, points out Gene Gallagher, owner of ERA Gallagher & Co. Real Estate in Bethesda. They may have pinpointed a particular neighborhood or even a particular home they hope to buy.

If they can't trade to a new house that meets their specifications, they'd rather not buy at all.

Such people might sell their home with a provision that the sale is contingent on their finding a new house within two weeks of the sales agreement, Mr. Gallagher suggests.

"That way you can get on with the sale of your house without worrying about where you'll be moving," he says.

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