It's the old "chicken or the egg" story. Every day hundreds of people struggle with the dilemma of what to do first... Sell their home and then buy one, or buy another home and then sell theirs.

Each method has its own risks. However, there is usually one option that will work best. Let's take a look at a very traditional couple, Bob and Gloria. They must decide which option to use: Sell their existing home first; or buy a new home first and then sell their existing home.

Bob and Gloria knew for some time that they would be selling their home on Obispo Street. They had purchased it just after they were married and now they were outgrowing it. They loved their present neighborhood and wanted to move to a similar area.

They had made many improvements to their home. It was decorated in the very best of taste. Everything was in perfect condition, but the home was just too small now that they had two children.

They had their Realtor, Andrew Dougill, stop by and give them a value on their home. Andrew looked through the home and noted all the improvements they had made within the last five years. He estimated the value of the home, and advised Bob and Gloria that it would probably sell within 60-90 days.

Encouraged by this, Bob and Gloria asked Andrew to keep an eye out for homes in the Palma Ceia Park area. Specifically, three or four bedroom homes with fireplaces. Andrew enrolled them in Hoffman Realty's HomeFinder Service and began emailing them Palma Ceia Park listings from the MLS, and they would visit open houses in the area.

Occasionally Bob and Gloria would schedule a private showing with Andrew to see the inside of a home or two. They began to get a real feel for what was available. Over a three-week period, Bob and Gloria saw a number of Palma Ceia Park homes that they liked.

However, they didn't find the perfect home.

At Andrew's suggestion, they visited their Lender and obtained a "Preapproval Certificate." Andrew explained that this was their approval for a new home loan. This certificate would show a seller that Bob and Gloria were qualified to obtain a loan. It would make any offer more appealing to a seller.

Bob and Gloria now knew they could afford to move. However, because they didn't have to move, because there was no urgency, they decided not to put their home up for sale until they found the perfect new home.

Bob and Gloria were worried about selling their home before finding another. They were concerned that since their home was so nice, it would sell quickly... perhaps too quickly. Then they would have to make a fast, or even a rushed, decision on a new home.

They were afraid of having to compromise if there was nothing out there that was just right for them. So they chose to keep looking, instead of listing their home. They visited more open houses, and they drove by almost every new listing Andrew sent them.

On weekends they drove through Palma Ceia Park and other similar neighborhoods just to look, see and feel the areas. They always came back to Palma Ceia Park because it was their favorite area. They liked the public school and its proximity to the interstate and downtown. It was a reasonable distance to both of their jobs.

Each Tuesday, Thursday and Saturday they received a packet of new listings from Andrew that his Multiple Listing Service computer search had turned up. One day, Gloria opened a packet of listings from Andrew. Inside were two brand-new Palma Ceia Park listings. She drove by them, and thought they both had possibilities.

Gloria discussed both listings with Bob that evening. They decided to call Andrew and arrange to look at the homes Monday evening. That Monday evening their lives changed.

They found the perfect Palma Ceia Park home. It was gorgeous. Everything that they had hoped for - and more. Two fireplaces instead of one, 2 baths instead of 1, and a master bedroom with huge walk-in closets.

The only problem was the asking price. It seemed to be about 10% higher than other similar homes were selling for in the area. Even allowing for the perfect condition (the setting, the baths and fireplaces), the most they could justify offering was about 5% less than the asking price.

Bob and Gloria had Andrew prepare an offer that evening for 5% under the asking price. They felt it was a very reasonable offer.

Of course, since their home wasn't even for sale yet, they had to make Palma Ceia Park offer "subject to" the sale of their home on Obispo. In other words, they wanted the Palma Ceia Park owner to remove his home from the market until their home on Obispo sold.

Bob, Gloria and Andrew were convinced that their home on Obispo would sell within 60 days. Therefore, they worded their offer to ask the seller in Palma Ceia Park to hold his home off the market for 60 days. That would give them the necessary time to sell Obispo.

According to the "contingency" clause, if their home on Obispo did not sell, they would not have to buy the Palma Ceia Park home. Everything would work in their favor because they would not lose any money. They had no risk.

The next day Andrew presented the offer to the Palma Ceia Park Realtor, Margie Lomas. He explained to her how perfect Palma Ceia Park was for Bob and Gloria. He gave her a copy of Bob and Gloria's Preapproval Certificate.

Most importantly, Andrew took great pains to share with Margie all the details of Obispo - how perfect it was. He told her they would list the home "right on the money" to make sure it sold fast.

Andrew also told Margie that he was convinced Obispo would sell in two or three weeks at the most. He said that even though the offer was contingent on the sale of Obispo, there was very little risk to the Palma Ceia Park owner.

Margie seemed very positive about the whole offer. She promised to meet with the Palma Ceia Park owners that evening. Andrew called Bob and Gloria to tell them that he thought things went well, and to keep their fingers crossed.

Margie called Andrew back the next morning with bad news. Even though Bob, Gloria and Andrew felt strongly that Obispo would sell within 30-60 days, the owner in Palma Ceia Park was afraid of removing his home from the market for any length of time. He wanted some "shouldering of the risk" by Bob and Gloria.

The Palma Ceia Park owner felt that he was being asked to take all of the risk. If Obispo did not sell in 60 days, Bob and Gloria would walk away scot-free. They would loose nothing - it wouldn't cost them a penny.

However, the Palma Ceia Park home would be off the market for 60 days of prime selling time. The Palma Ceia Park owner knew he had one of the nicest homes in the area. He was sure that his Palma Ceia Park home would sell within 60 days.

He just couldn't see any benefit to taking it off the market and "hoping" that everything went as planned with Bob and Gloria's home. Also, the Palma Ceia Park owner further observed that if he accepted Bob and Gloria's contingent offer, he couldn't make any definite plans.

He had no way of knowing for sure if Obispo would sell, so for 60 days he would be "in limbo." He did not want to be in that position. The Palma Ceia Park seller had a whole different perspective of the proposal than did Bob and Gloria.

He worried about, "What will I do and where will I be if things don't work out?" All Bob and Gloria could see was, "It's a 99% sure thing... just give us a little time and we'll work it out."

Based on his concerns with the proposal, the Palma Ceia Park owner indicated to his agent that he would consider one of the following options:

Option # 1:     He would take Palma Ceia Park off the market and hold it for 60 days for a non-refundable deposit of $10,000. The $10,000 would apply to the purchase price; but if the sale did not close within 60 days, Bob and Gloria would forfeit their $10,000 to the seller. This type of arrangement would shift some of the risk to Bob and Gloria. The amount of $10,000 seemed to be a reasonable figure for the seller. This would cover his loss if he held his house off the market for 60 days and then had to start all over.

Option #2:     He would agree to sell the home to Bob and Gloria at the price they offered. However, he would reserve the right to keep his house "on the market" and sell it to any other buyer who came along in the meantime. If Bob and Gloria could sell their home before another buyer came along, they could get it.

Option #3:     He would agree to hold the home "off the market" for Bob and Gloria for 30 days, but he wanted the full asking price. This would be his compensation for holding the home off the market. Under this option, Bob and Gloria would be under no risk if their home did not sell. However, they would have to pay a higher price to get the home they wanted.

Bob and Gloria talked to Andrew about the three options. None of the options were what they had hoped for. Andrew explained that the seller of Palma Ceia Park wanted to know with a strong degree of certainty that if he took his home off the market it would be sold.

The first option would allow him to receive reimbursement in case Bob and Gloria's home did not sell promptly.

With the second option, he could keep the house listed; and he wouldn't lose any time if Bob and Gloria couldn't purchase it.

The third option would allow the owner of Palma Ceia Park to receive the full asking price. In exchange he would keep the home off the market for 30 days.

The owner knew his home in Palma Ceia Park was a beautiful home in a great location. He knew there would be other buyers that would love his home. In other words, he knew his Palma Ceia Park home would sell quickly, at a good price. He didn't need to get involved with hoping someone else's home would sell.

"But I don't know if I want to risk $10,000 if my house doesn't sell," said Bob, referring to Option #1. "What if our home doesn't sell within 60 days? Is it worth risking $10,000 to get the Palma Ceia Park home?" Bob scratched his head. "And I know I don't want Option #3! As nice as the Palma Ceia Park home is, it's not worth the full asking price!"

"But if we don't take Options one or three," observed Gloria, "we're stuck with Option #2 - and the Palma Ceia Park home will probably sell before we can get our home sold." "Or, we have to pay a high price or risk a substantial deposit to hold it," replied Bob.

After considering every side of the issue, Bob and Gloria decided that they just weren't ready to risk $10,000. Nor were they willing to pay the full asking price. So they took Option #2. Andrew listed their home on Obispo the next day.

Three days later the phone rang. It was Andrew. "The Palma Ceia Park home sold last night for the same price you had offered. The buyer of Palma Ceia Park listed their home several weeks ago and it sold last week."

Gloria's heart sank. All along, in the back of her mind, she had known that the odds of them selling Obispo before Palma Ceia Park was sold was an outside chance at best. However, she had already been living in the Palma Ceia Park home in her dreams.

She imagined the children playing in the backyard pool. She had envisioned cozy winter evenings, curled up in front of the fireplace reading a book. And the huge master bedroom! "Oh well," she thought, "it's all gone now."

When they had started looking for homes, Gloria hadn't realized that there would be this much stress involved. It was almost enough to just forget the whole thing, but they had put off the decision too long already - Obispo was just too small.

That evening Bob and Gloria talked about what was really important. They called Andrew and asked to meet with him the following day.

"Andrew, we need to sell Obispo," began Bob, "but we just don't know what to do if we can't find anything we really like once it sells. We just don't want to be pressured into buying a home that's not right for us in the short amount of time that we'll have."

"Well, let's take an objective look at where you are," said Andrew. "You're not the first clients I've had that have been in this situation. Let's look at what usually happens."

Andrew continued: "We can list your home for sale with the stipulation that you can remain living there for up to 60 days after the closing of the sale. Most sales close 30-40 days after the offer is accepted. This would give you about 90 days, perhaps longer, to find another home. It's interesting, but the house you will eventually buy is probably not even listed yet. The houses that are listed for sale now, the best buys, will probably be sold by the time your home on Obispo is sold," said Andrew.

"Why is that?" asked Gloria.

"The good ones sell fast," said Andrew. "Most of the nice homes listed at fair prices will probably be sold in 30 days. So, if your home sells six weeks from now, there will be a whole different group of nice Palma Ceia Park type homes for sale."

"But how do we know for sure that there will be a home we really like?" wondered Gloria.

"Well, let's look at it this way," replied Andrew, "you've been looking at homes seriously for about three to four weeks. You've seen a number of homes in your price range that you like. You found one that you were in love with."

Andrew continued, "It's been my experience that when your home sells, you will find the right one. While there is no way I can predict what homes will be for sale, I can predict that there will be a completely different group of homes for sale. One of them will be right for you."

"But what about the prices?" asked Bob. "What if there is nothing that we can afford?" Andrew answered, "What I hear you saying is fear of the unknown. It's difficult to make a move without knowing exactly what lies on the other side of the mountain, so to speak. However, there is no way to completely eliminate all risk and still get a good value. As a matter of fact, we haven't talked about the biggest benefit of selling your home first - and that's the power of cash negotiation."

"You see," Andrew continued, "you are already more knowledgeable than most buyers about Palma Ceia Park type neighborhoods, prices, features and value. You've done your homework and have learned that market. You're experts. In fact, I'd say you know the Palma Ceia Park market better than 90% of all real estate agents."

"I'll continue sending you information about Palma Ceia Park homes until your home is sold. You'll become even sharper about the market. When your home sells, you'll be one step ahead of the great majority of buyers out there. You will have a tremendous edge. Remember, you're not the only family looking for a well-priced, nice home in the Palma Ceia Park area. When an attractive, well-priced home is listed, you'll be one of many who want it. Since you've done your homework, you'll be able to move more quickly and 'pick the plum' before anyone else gets it."

"What's more is that with your home sold, we'll be negotiating from a position of strength. Any offer you make will be very seriously considered, because it's like cash. Your home will be sold, so there will be little risk for the seller to deal with because you're already preapproved for a new loan. I'll be able to bargain on your behalf even more effectively with a seller. I've helped many buyers get really good deals using these techniques."

Bob and Gloria decided to take Andrew's advice. Four weeks later their home was sold. Andrew began updating Bob and Gloria daily with all the new listings on the Multiple Listing Service computer.

When a new listing would come through, Bob and Gloria knew about it the day it was in the computers. They were often the first people through the new listings. They kept meticulous notes about values and features. They had notebooks full of notes.

Two weeks later Andrew called with the news that another Palma Ceia Park home was listed for sale. The home very closely matched Bob and Gloria's specifications. The price seemed to be right on the money.

Andrew emailed the Multiple Listing Service sheet to Gloria at her office. On her way home from work that night, Gloria drove by the new listing. It was gorgeous on the outside. She called Andrew and Bob from her car.

Three hours later, Andrew finished writing the offer. Bob and Gloria had decided to make an offer of 2% below the asking price. They were prepared to pay at least $20,000 more than their offer because the home was perfect.

The next morning, Andrew called with good news. Their offer had been accepted as written. They got the house for $20,000 less than they would have paid!

By selling their home first, Bob and Gloria put themselves in a stronger position when it came to making a purchase. They could negotiate better, because there was very little risk involved for the seller.

Bob and Gloria put themselves in a position where it was very easy for a seller to accept their offer and ended up with the home of their dreams.