Let's be frank here, Contingencies are tough in any market. I understand that you want to trade up - But, think about it, you go to somone anxious to sell their home and make an offer and say ... oh, but you have to wait until I sell MY house first. What would be your response?
It can happen, but lets be realistic here... if you really want to buy this house make an offer with a contingency and a first right of refusal. This way, if you really, really want this house, you can still buy it and get a bridge loan until your house sells. Yes, I know it sounds scary, but I may be your best shot at it.
Right of refusal:
This means that the seller will accept your offer and still have the house on the market.. if someone else comes in and wants to buy it.. and can fully perform the contract with out having to sell. The seller has to call you first and tell you to step up to the plate and deliver ( buy the house).. or they are selling the house to someone else.
I have a client that did just this.. and we are closing on a much bigger foreclosure home in a much higher rated area.. he recently sold his home FSBO.. ( with my coaching) he did take 20,000 less for his home, but he still will only have a 40,000 mortgage and purchased a 600k home for 450 in forclosure!
Can't beat that with a stick!
Try to avoid the contingency, the market is a buyers market, yes, but sellers still need to sell and a contingecy is NOT selling.. it is hoping and waiting that your home sells.