To be capable of buying without having to sell first is the ideal position for the move up or move down buyer. If the money to do so is not derived from cash in savings, there are alternate methods.
Many banks offer "bridge" loans to accomodate such transactions. The Buyer borrows against equity in the home they plan to sell, uses the cash for the down payment on the new purchase, and then repays both the existing mortgage and the bridge loan when the current home sells.
The stress arises in this method when the current home does not sell at the expected price or the for the expected value. The home owner is in the position of makine three separate mortgage payments and although they seemd to qualify for all three at the time the financing was arranged, the reality of making these payments puts the Buyers on overload.
Another method is to borrow against other investments, such as securities or stocks. Often an interest only payment is required. Many brokerages are currently involved in offering enticing rates to clients who wish to borrow using their investments as security.
The process:
This is undoubtedly the most compromising position to be in from a negotiability standpoint.
Sellers don't like to take such offers in good markets so they usually insist that you pay a premium for "tying up" their house while you try to sell yours.
Buyers can usually sense the pressure you are under and they try to "lowball" your asking price hoping that you want the house you are buying so badly that you will succumb to their demands.
But, because Sellers usually need the equity from the sale of their current home to purchase their next home, we see this type of transaction fairly often.
The process: