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By Tara-Nicholle Nelson | Broker in San Francisco, CA

6 reasons Buyers aren't biting (and what Sellers can do to change that)!

Interest rates are at historic lows: less than 4.5% on a 30-year-fixed and below 4% on 15-year fixed rate loans. And prices are low, too - at or near bottom in most of the country.  Together, these items mean that affordability is near an all-time high.

It's like a massive, pre-holiday sale on real estate!

Nevertheless, home sales are only "gradually" creeping up, according to the most recent data published by the  National Association of Realtors.  And sellers are clearly still feeling price pressures; on Trulia's October price reduction report, an all-time high 27% of American homes listed for sale had had their price cut at least one time!

So, what's stopping buyers from running out to grab up all these affordable homes at affordable rates?  And what can savvy sellers (and listing agents!) do to offset these obstacles?

1.  (Perceived) difficulties in qualifying for a mortgage.  Mortgage guidelines have tightened up significantly over the last few years, now requiring good (but not perfect) credit, documented income, a proven stable job history and cash for down payment and closing costs.  Some buyers find it difficult to scrape the down payment money up; others find that they can qualify, but not for a large enough mortgage to buy any home worth owning (banks have tightened up debt-to-income ratios, too). Many would-be buyers don't even consider themselves serious prospects, disqualifying themselves in their own heads because they heard somewhere that a 20 percent down payment is necessary - in actuality, many buyers can qualify for a 3.5 percent down, FHA loan.  Between actual difficulties qualifying and perceived difficulties that don't actually exist, lots of buyers are not biting because of loan "issues."

Seller Solution: 
Ask your agent to have a mortgage broker colleague prepare flyers reflecting various loan options, to give open house attendees a reality check about what it would actually take - including down payment, closing costs and monthly payment - to buy your home. Also, consider offering closing cost credits or being willing to chip in for lender-required repairs to empower buyers who are struggling with mortgage qualifying to close the deal.

2.  Fear of buying a foreclosure. The ongoing robo-signing/foreclosure fraud scandal and the resulting foreclosure freeze is beginning to play a role. If you haven't heard, two of America's largest mortgage servicers have frozen foreclosures and resales of foreclosed homes in 23 states, and Bank of America, the largest lender in the land, has frozen them in all 50 states, all because sweeping fraud and improprieties have been revealed in the way the banks are processing foreclosure documentation.

More and more, buyers are fearful that if they buy a foreclosed home, that sale could be reversed down the road if it comes out that the banks wrongfully foreclosed on the former owner. And that could be stopping buyers from, well, buying foreclosed homes.

Seller Solution: If your home is not a short sale, all of your home's marketing materials should be trumpeting this fact - especially if most of your home's competition (e.g., similar homes in the area and in the same price range) are bank-owned homes and short sales.  Seeing 'Not an REO/Not a Short Sale' on a listing or flyer is quite magnetic to buyers right now.

3.  Waiting for the shadow inventory to come out. The phrase 'shadow inventory' refers to the homes that have been (or will soon be) foreclosed on by the banks, which are not yet on the market; some estimate this inventory to be as high as 7 million homes! Many buyers who are actively house hunting -- and who are disappointed with the homes that are available -- are fearful of pulling the trigger because they believe the banks are going to start releasing their 'shadow inventory' soon, and that those homes will be better than what's out there on the market right now.

Seller Solution: 
Work with your agent to strategically stage your home and even do basic, inexpensive repairs, to make it stand out against the competition as a desirable property.  Also, ensure that your pricing is in line - or even slightly below - similar homes on the market right now, to ensure that your home seems like a very strong value for the price.

4.  Waiting for the bottom. Given the trajectory of home prices over the past couple of years, there's a large contingent of buyers who are afraid that after they buy, home price will continue to fall and they will lose their hard-earned investment in the home. These are folks who are still waiting for the bottom (although by some accounts, including that of the Case-Shiller Price Index, the bottom is here or has already passed, in many cities).

Human nature is always to wait too long for the bottom, miss it, and then end up wishing we had bought sooner. The behavioral economics theory of myopic loss aversion explains this phenomenon as being due to the fact that the pain of losing money generates a greater psychological fear and avoidance than the prospect of gaining the same amount of money. Buyers can set themselves up to gain over time, even if they lose equity in the very near term, by making smart decisions about the home they buy and how much they pay for it, and planning to stay in their home for a longer term than previous generations of buyers did.

Seller Solution: 
This is a difficult one to counter, because it's really more about the would-be buyer's interpretation of the market than about their reaction to your home.  If you live in a market that has had recent increases in home values, include that data in your marketing - make sure buyers are aware that they may already have missed the very bottom, and create a sense of urgency to buy your home before prices go up even more.

5.  Unemployment/underemployment. Take California, for instance. The national unemployment rate is 9.6%; California's is a whopping 12.8%. But right around the same number of Californians are underemployed, meaning they work part-time, but want full-time work. That's right, a quarter of Californians are unemployed or underemployed, and -- right again! - none of those people are buying homes. On top of that, many people who do have jobs lack job security, the confidence of believing they'll be able to keep their jobs in the future. Interest rates could be zero, and people will not buy homes as long as they have no jobs or job security.

Seller Solution:  If there are major employers in town that are within an easy commute of your home, both you and your agent should consider marketing it directly to employees there.  Share your home's listing with Facebook friends who work there or even send an email out to your own contacts, if you work there yourself!  Major companies' Human Resources Departments might help you get the word out to their employees - especially if you offer some incentive to an employee who buys your home, like a year's worth of subway passes.  If you have universities nearby, there are likely online bulletin boards that offer housing options directly to relocating professors and employees.

6.  Need to keep options open.
Because home values are so volatile, currently, there's no guarantee that you can resell today's new home tomorrow without taking a loss. If we've learned anything from this crisis, we all know that it just doesn't pencil, financially, to buy a home on today's market unless you plan to own the home for at least 7 years (give or take a year or so, depending on how your market has fared in the housing recession).

Many Americans don't want to be tied to one location, given the changes in the job market, because they simply don't want to be stuck in one place, geographically speaking. They want to be free to meet someone via online dating and move if the match sticks. They want the freedom to move across the country or even to the next city or state for a job, if that's the direction their career takes them. The more mobile the person, the less likely they are to buy a home.

Seller Solution:
Price your home well - if it's been lagging on the market, make sure you get aggressive and cut the price below a common buyer search cut-off price point (see this post for more details: Sellers: 5 Signs It’s Time to Cut the List Price of Your Home).   Even buyers who are seriously in the market, get nervous about buying a home when it seems a bit overpriced, because they fear the price will drop some more in the coming months and years, extending the period of time before they can sell it at a break even or (hope beyond hope) a profit!  Don't let overpricing cause you to lose buyers who otherwise would have bitten the bullet, pulled the trigger and hopped off the fence in order to buy your home.

Comments

By Patricia Burke,  Thu Oct 28 2010, 04:44
Thought this was an interesting article.
By Reginold Jones,  Thu Oct 28 2010, 04:51
Great commentary. A must read for buyers and sellers!
By Kerry,  Thu Oct 28 2010, 05:06
Very interesting and a good read. Thiking of putting my home up for sale next year after 4 years of ownership. I'm praying for the best.
By Lucchesi,  Thu Oct 28 2010, 05:07
Buyers are waiting for another Obama Bailout. Nothing worse than buying now only to find out if you waited in the Spring Obama would have given you $8,000 Rebate cash from your best deal. This is what's killing the market, and always does when government intervenes to help. Same with cars... I will never buy another GM vehicle, a/k/a by some - "Government Motors".
By Sandrine Deschaux,  Thu Oct 28 2010, 05:08
It covers it all. Great analysis of the current marketplace.
By Lorraine Neff,  Thu Oct 28 2010, 05:14
This might be a good article to stick in with letters to potential sellers. Correct pricing is so important, and most people are so afraid they will sell a dollar too cleaply that they price too high.
By Louis Wolfson,  Thu Oct 28 2010, 05:18
Good article, but I see things as
1) supply (a lot of homes, plus foreclosures on the market or about to be),
2) demand (few buyers, unless you include alkl those who have lost or about to loose their home) and
3) affortablitiy (not prices, but ability to pay)
By Doug Francis,  Thu Oct 28 2010, 05:23
Understanding consumer psychology is hard, especially when it can change day to day! Until home buyers feel confident in their jobs and their future, they are probably going to remain wary.
By Keith Collins,  Thu Oct 28 2010, 05:25
well bucko my nephew purchase a house for 25000 cash they wanted 35000 from the bank they wanted 35oooo to cover the pat three years sitting there do to a the wife could not keep upp with the payments after the divorce
. three bedroom 1 bath and a two stall garage , it a older home but i think for anyone starting out a GOd send , the deals are out there it just what you think you want and what you need at the time ,, thence it the shoe fit buy it,
By Pattik,  Thu Oct 28 2010, 05:26
Most home sales in New England came as a result of the $8000 1st time home buyer's incentive. Unfortunately, homes over $200,000 are not moving because there are no new middle to upper management jobs coming into the region. Our home is priced to the market, after having a comparative market analysis (CMA) done, and we're offering a $5000 buyer's incentive. We've had no activity. Average time on the market here: 9 to 12 months.
By Dale Falkowski,  Thu Oct 28 2010, 05:33
Interesting Ideas. Buyers have no motivation. National News is All Negative All The Time.
By James Foy,  Thu Oct 28 2010, 05:35
Many are also waiting for the election to find out what the federal income tax will be. The government panel to balance the budget is suggesting eliminating the mortgage interest deduction (I don't think the bankers that back the politicians will let this happen), and in harder hit areas like Las Vegas and California's Inland Empire, there is a likely collapse in the commercial sector in the next year.
A lot of the stats used here are the official government stats, I suggest everyone look at John Williams' http://www.shadowstats.com/primers-and-reports to see reasons why the government stats might be underreporting unemployment and inflation. Wayne Allyn Root had a good article on this on October 18th.
By Misspeggy,  Thu Oct 28 2010, 05:47
Americans have been and still are creative. I think this is a great article. We live in KC and sold our home in 60 days for full price, which was over the average price in our neighborhood. The catch: The buyer has to get his credit score up and we agreed on a closing date three months away. Catch number 2, we had to put a new roof on the home. Our strategy for selling: We have lived in our home like it would be our last home. We have kept up on what is 'in' as far as flooring, counters, great use of space, and last but now least, staging. We had showings sometimes two a day. I think we showed it over 50 times in 60-ish days.
By Henry J Daniels, CMHS, CMPSI,  Thu Oct 28 2010, 05:51
Tara, Great post. Great suggestion for having a Mortgage Professional at the open house to help people get ranged in on what is possible. Here in Texas there are several programs that can get people into a home with no down payment. Folks in Texas can see my blog http://woodlandsmortgagebank.com/fthb-programs-you-can-use-now/

On your second point on foreclosures the Big Banks such as BofA have indemnified the title companies against loss so as a buyer you are protected even if title was not conveyed properly in the past in the foreclosure process.
By Maria Lainez,  Thu Oct 28 2010, 05:52
DON'T LET THE MEDIA NEGATIVITY DISCOURAGE YOU FROM BUYING OR SELLING. Don't wait for others to benefit from your personal needs. Real Estate is personal with the exception of Investors. A HOME is a castle, your castle. Since my years in real estate, interest at 17%,prices high, people always needed a home and bought one.. Don't wait for others, talk to a professional about your present needs. Availability for YOU!!!What is best for YOU!! You will be surprised!!! Choose a professional that has your best interest at heart.
By Fiona,  Thu Oct 28 2010, 05:52
I would love to buy a house now cause of the prices and mortgage rates but ... I can't sell my house! Like Pattik said I am priced well, staged well and in great location, but only minimal activity. Very frustrating, but guess I will have to wait until the economy improves so that buyers have more confidence.
By Larry,  Thu Oct 28 2010, 05:56
Demographics play a huge part in some areas. I live in one of those areas where, if anywhere else, buying here would not be very desireable. But, this is an area very desireable for for a second home, or retirement. It's in an area that is recreation oriented, right on the largest man-made lake in Oklahoma. Homes range from small trailors to large estate like homes, and everything in between. Some are lakefront with docks, while others are interior large double wide manufactured or site built with lake acess and views. Most are full time owner occupied in my area. My neighbor sold his small 3 bedroom 1 bath home with lake view for $300K last year to a second home buyer. Another neighbor with an interior small 2 bedroom 1 bath manufactured home sold theirs for $215K late last year to a full time resident. Both were cash sales. Employment here doesn't seem to play a part. Know your demographics, it can make or break a deal. Check out my home offered at $198,800!
Copy and paste this url: http://lake-eufaula-home-for-sale.webs.com/ Not an REO/no short sale
By Christine Rich,  Thu Oct 28 2010, 05:59
All of these points are right on. When I saw the headline I expected generic national-level advice, but these items all apply to my market also. Where I'm sitting (Arlington Virginia) there is very little inventory and unemployment rate is better than in much of the country, yet buyers are very hesitant. You can only hear about all this foreclosure mess so long before it wears you down.
By Alysha Henning,  Thu Oct 28 2010, 06:00
I had the 'shadow' inventory question just a couple of days ago...
Thanks for sharing.
By Kurt Evans,  Thu Oct 28 2010, 06:02
Good article that covers a lot of the issues in the current market place. Thanks for your input.
By HouseHunterMD,  Thu Oct 28 2010, 06:05
You know, there just might be a reason people are leery of getting into a 3.5% down loan - maybe it has something to do with the economic meltdown we just had because people were using low-money-down loans to buy homes they couldn't afford? I think everybody knows darn well that you can get a 3.5% down mortgage. It's just that most people now understand that it's a colossally stupid idea. I'm going for 20% down in Montgomery County, Maryland. It's hard because the home prices here are still high, and if I allowed myself to get sloppy and jump in at 3.5% I could get more house. But it's the right long-term decision - at 3.5%, you're upside-down if prices drop even 5%.
By Rob Rathbun,  Thu Oct 28 2010, 06:10
Very good article Tara! I especially appreciate that you've put in the 6 problems and the 6 solutions. Far too often we see articles with JUST the problems, and no real solution in sight which can be interpreted by seller/buyers a reason NOT to make a purchase, sell a home, or adjust their position in the market.
By Jack Oudin,  Thu Oct 28 2010, 06:18
Hey Tara: a great summary/snapshot of today's market conditions nationwide. I also agree to one of the comments posted: "By James Foy, Thu Oct 28 2010, 05:35
Many are also waiting for the election to find out what the federal income tax will be. The government panel to balance the budget is suggesting eliminating the mortgage interest deduction..." That's an important factor too! I tell my Sellers/Buyers, there are closings everyday, but at a slower pace, however, the ones that are selling are priced for the current market AND stagged for maximum curb appeal and show like models inside. As an example, last weekend, I took a Buyer out to see 5 houses which met his search criteria. He hesitated on making an offer on his #1 &#2 picks, by Monday 2 of the 5 houses were under contract ($200-225K range). Indeed Short Sales & Foreclosures will appeal most to Buyers & investors who have the cash or credit to snap up the best of them. (Charlotte, NC)
By Andrew Rogovic,  Thu Oct 28 2010, 06:21
I find that it is mostly fear that is driving the lack of sales in our market. People are worried just as you mentioned that they are buying too soon and will lose value in their home. Cant blame them for worrying about that because all you read about is people losing their homes. However, I think this "fear" that is being felt by many people, might be a great oppurtunity for those really looking to buy a home.
From my side I have found my buyers either need to feel like they are getting a great price or really have to have found that home that they will regret passing on. Where the trouble lies in those homes that are neither special nor priced well. Those homes may be sitting for a while.
I am not a person that is shouting this is the greatest oppurtunity ever to buy as I think many people did that last year for same reasons they are doing it this year (rates, home prices, etc) and prices havent reflected growth yet. However I do think this is a time to pick and choose your spots. Buying a home is not like buying a stock where you may turn around and sell in short period of time. Long term investments like homes should not use potential equity as only requirement. Way of life and enjoyment of the home is what should be considered. Growth is just an added benefit.
By Frank Dolski Associate Broker,  Thu Oct 28 2010, 06:24
Hi Tara,
You make some very valid points! The fact is that we are at the bottom, mortgage rates are at historical lows and inventories are at decent levels; make it the right time for a buyer to purchase! The perception of the difficulties of getting a mortgage is just that, a perception. Yes, mortgage companies have become stricter and appraisals are closer to the sales price and sometimes challenging but this is a prime time to buy.
For sellers, they must price their homes correctly and equally important, they must stage their home or have a professional do so. Buyers make their decision typically within the first 20 seconds of entering a home. The exterior and landscape must provide excellent curb appeal. The interior must be de-cluttered, walls painted, flooring clean or replaced if required and the kitchen must be up-to-date in relationship to the competition. If most homes in this price range have granite and stainless steel, than this must be a consideration.
The bottom line is that sellers must do everything in their power to have their homes ready for market prior to listing. The market is slowly coming back and for buyers, this will only mean higher prices and mortgage rates. Take advantage of the home prices and mortgage rates while you can!

Regards,

FrankDolski MBA, ABR, e-PRO
Associate Broker
CARTUS Certified Relocation Specialist
Coldwell Banker Hearthside Realtors-Lahaska, PA
http://www.FrankDolski.Com
By V. Philpot,  Thu Oct 28 2010, 06:34
Great info. You are right though. Even if the interest rate goes to zero, I am one who still couldn't buy a home. Due to the real estate crisis, I had to short sale my $413,000 home in Las Vegas. The buyers of my 2500sf, 3yr old home paid $185,000 for it plus received an $8,000 "reward" since they were 1st time buyers. I am now in a rental apartment, unemployed, on social security fixed income and my credit score has dropped drastically because of the short sale. While the gov't was busy bailing out banks, car dealerships etc. and rewarding 1st time home buyers for generously purchasing our homes for little of nothing, they neglected to compensate us
poor victims who got caught up in the crossfire of corruption. Seems to me while the perpetrators are rewarded, the victims are punished. Ronnie Phil
By Alrady,  Thu Oct 28 2010, 06:36
Great article showing creative solutions... there will be no solutions for some like the Unemployment . I am not a Realtor but I blog about Foreclosures Evicitions and You. i think your next wave of problems is going to be that title insurance on homes that have been previously foreclosed on - may become a problem.. There is already rumblings by title insurers about insurance going forward. With the uncertainty of employment I can understand why many don't want to buy - particularly when down the street someone more desperate is willing to sell for less. In our state there is NO WAY to sell unless you short sale... homes are too far underwater here. Even then the people I know don't want to lower property values even further and slash prices too low and risk the bank rejecting the offer.

I also like Jack and James comments ... With the need to move housing and get through this MESS, government will have to continue to incentive home buying - I hope they wouldn't be STUPID enough to do away with mortgage interest deduction for another few years.

Also pointed out above, there are sales - slow sales but the market isn't dead totally. I did a twitter post on your article... good stuff.
http://zingervotes.blogspot.com
By Karen Davis,  Thu Oct 28 2010, 06:39
Another important factor: The "selling price" on the house may be low, even amazingly low, but a buyer has to live in that house. Are property taxes based on a prior overpriced sale figure on the house? What is the heating cost on that huge house? Are there arrears due for past unpaid taxes or utilities? Are there storm windows? Is the basement damp or mildewed? How old is the roof? Furnace? If a realtor could help buyers calculate the honest monthly costs and repairs for a house, buyers might be more willing to make a decision. I know exactly what it costs monthly, annually, every ten years to live in the house I am in now--if I can't calculate that for a different house, how can I make a rational decision?
By The Party's Over,  Thu Oct 28 2010, 06:44
Banks are not lending, there is a massive( and increasing) shadow inventory, employment is not secure, and income is not proportional to the cost of a home worth owning. There is nothing any individual buyer or seller can do about these very real concerns. Corporate relocations or "givaways" to cash investors are all that are moving.
By Voices Member,  Thu Oct 28 2010, 06:46
I have a condo in Vero Beach Florida that I would like to sell in the summer. 2BR/2BA, 2nd Floor, Rennovated. The comp pricing is $48,000 - there are 3 other condos for sale in the small complex of 32 units. The objection: the HOA is $295, which includes exterior maintenance and the pool - not gated or clubhouse with all the bells and whistles. The HOA fee is what it is, and I expressed my concerns with the president that this cost has to be reigned in. How do you overcome an exhorbant HOA fee?
By Bob Edwards,  Thu Oct 28 2010, 06:47
The key factor for Buyers and Sellers in todays market is to find a knowledgable real estate professional. Take the time upfront to sit down, interview and choose an agent you're comfortable with and one that knows the "ins & outs" of the current real estate conditions. It's a great time to make your dreams come true.
By Royalyn Ponder,  Thu Oct 28 2010, 06:49
This seems to be exactly what I have been talking to people about. And I keep getting these type answers. The big one in my town is mortgage financing and jobs. There are so many people here that are afraid the job they have today they will not have it tomorrow. So we just keep on plugging and do the best we can with what we have.
By Andrew Betancourt,  Thu Oct 28 2010, 06:49
The American public is a stupid public. There was a time when we had gold fever and evrybody was out buying gold then stuck with trying to sell it at a profit as prices fell. A house is your home, you should like your neighborhood, like your neighbors, think of your house as your home and not as money sitting in dead storage. Years ago the real estate prostitutes were telling everybody to refinance because of all that equity sitting there. They got their referral commission along with the loan brokers making money and ran away to the next scam. And now the American public thought of their house as money in the bank, to refinance and use it for vacations, boats, trailers, rv's and college tuition for their know nothing ability kids. Now the chickens have come to roost and it looks bad and will get worse. I have little sympathy for those people who went into bankrupty and had their houses foreclosed upon. I would like to see the credit charge slips for several years preceeding bankrupty and see how people squandered their money. As a landlord for over 38 years I could write the book on tenant deficiencies. Boo Hoo, you made your bed (improperly) and now have nothing to lie in.
By Ktpcsa,  Thu Oct 28 2010, 06:51
well if there was some policing of policies in the this may not have happened. is it not true that during the depression banks were taken out of the mortgage. is it true that we created this mess with our greed etc. and getting to the guy who commented on american cars and the bailout. i just dont get it, i remember when the japanese koreans made the worse cars and we gave them our cars which are now toyota mazda etc. anyone whos been over seas knows that. tv's etc we gave it away 40 years ago, now that were suffering we complain. we need to manufacture something, airplanes and autos at least. you dont want american cars you want toyota but you dont want health care yet we are so blessed that we never had war or major disasters in this country but we love giving our money to the japanese etc. now iraq we spend billions yet no one complained about its cost and effect on the economy yet now a minority in office and he has to be a super man and fix things that dont want to be fixed. i just hate that people talk with emotion and not fact. the fact that most of your doctors engineers, etc will come from other countries is a reflection that we lost focus. not even rich americans are smart enough. education has become a joke, we are not no. 1 anymore and this did not happen with the current administration. we were blessed 40 years ago ww2 not to have to rebuild but build, now were falling apart again nobody monitored anything, yet we walk around with our eyes open yet we dont see. and by the way ive been around the world you think the japanese love that you buy their cars, no way business is war they say
By Nancy J. Trube, ABR, CRB, CRS,  Thu Oct 28 2010, 06:58
Thank you for a well written article. I advise buyers that we don’t know the “future,” but we know “now.” Now the rates are in the 4% to 5% range, which can translate to tens of thousands of dollars in saving when compared to a 6% -7% rate. They may not “profit” through appreciation per se, but they need to be shown that a lower interest rate will save them money long-term. This should be emphasized more by NAR and media. People with a short time line are wisely renting right now. We do rentals too!
By Norman D. Hartzel,  Thu Oct 28 2010, 07:02
This article is MUST reading for all buyers and sellers. We as realtors must be ready to work with all these issues. Thanks for your insights.
By Elizabeth Owens,  Thu Oct 28 2010, 07:06
Great article! I really appreciate the fact that you offered a solution for each problem. I will send this to all the Sellers I am currently working with.
By Dawn Rupersburg,  Thu Oct 28 2010, 07:11
Sellers and banks are still trying to hold out for a price. I have good buyers and we put in good contracts and seller's and banks are just playing games. When there has only been one buyer in an entire zip code that purchased a house in the sellers $150's price range and the seller turns down a good offer with a solid buyer that is just denial. Especially when the seller owns the house outright and is ready to move into a new one they just built. I think seller market denial is very real.

For all your Ocala Real Estaste needs Call Dawn Rupersburg 352.553.3369 or visit my web site http://www.ocalaflhome.com for the best MLS search engine.
By Robin Faison,  Thu Oct 28 2010, 07:11
Chris Thornberg, a well recognized national economist, has quite a bit to say about this economic recession. I would encourage any one to go to beaconecon.com to read his material. He says that the recession has hit bottom and that we are in recovery mode now. He says interest rates are going to increase slowly over the next 6 months. It is my opinion that our government has to address the larger issues of shadow workers, innovation, energy conservation, executive mismanagement, job creation before we will see any meaningful change in the US economy.
By Linda,  Thu Oct 28 2010, 07:12
The age old questions is, What aren't realtors lowering "Their" Commission for these houses that have to be marked below asking price. They know exactly what the market is, and still insist on their 6% cut as if the market were great.

They will suggest low balling the price to get the house sold, but unless there is tons of equity built up- The seller won't make thousands of dollars as the realtors will. Something to think about !!
By Virginia Gregory,  Thu Oct 28 2010, 07:19
Excellent article.. with good tips to help change the situation! It tends to be a tougher market when the seller doesn't want to be realistic with the price but a house sells fast when the price is right.
By Eulayses Perry,  Thu Oct 28 2010, 07:37
90% of the many homes that I have considered are Priced well above the assessed value. Sellers are trying to get more than the market says that the house is worth because they bought high and made improvements that cannot be recovered. They expect todays buyers to make the same mistake they made.
By Kaye Norenberg,  Thu Oct 28 2010, 07:39
I love this article. As realtors we have to work a lot harder not only selling our clients homes but also the community it is located in. In representing buyers we have to build a case that the offered price is reasonable not only because of comparables but the fact that our clients are qualifed and the deal will close. Not always an easy job but highly rewarding!
By Linda Phillips,  Thu Oct 28 2010, 07:40
Very interesting. I'm going to apply a couple of these solutions to my listings, today!
By Scott Macdonald,  Thu Oct 28 2010, 07:41
More Realtors need to take the time to think outside the box and get properties sold. Good advice and article to pass along to others. Thanks
By Victoria,  Thu Oct 28 2010, 07:43
My mom is trying to sell her house. It has been on the market for 14 months. My husband and myself are living with her as our house sold and we are waiting on her house to sell. We are all moving to another state together. Her real estate agent has done nothing to help her. I know you probably hear this a lot, but I am telling the truth. The agent won't even show the house. He calls and tells her he is busy and is sending someone over to look, and we have to show it ourselves! Over the past 14 months he has sent a total of 4 buyers and he has never shown it once! He also brought us the open house signs so we can have an open house hosted by us!! I don't know how she ended up with such a long listing agreement, She only renewed once, which was in february this year ( wish she hadn't) she said she renewed for another 6 months. When I called the reale state office they informed me the listing run out in February 2011!! I told her to go to the real estate office and get a copy of what she signed but she won't. The problem is she is friends with the real estate broker and won't say anything. I told her a friend would not treat her this way. I read the first listing agreement and it says nothing about the agent having to show the house and nothing about the agent having to host an open house. Is there anything I can do to terminate this listing without her??? Is this the way agents behave?? We sold our house by ourselves in 2 months! I would like to sell my mothers without this agent. I fell he will be getting a commission for doing nothing!! What can I do, leagally??
By Nina,  Thu Oct 28 2010, 07:43
If you live in a different state with long term employment and want to relocate to say Saint Cloud, find job and buy in another state how can you get financing?
By Victoria,  Thu Oct 28 2010, 07:49
By Victoria, Thu Oct 28 2010, 07:43
My mom is trying to sell her house. It has been on the market for 14 months. My husband and myself are living with her as our house sold and we are waiting on her house to sell. We are all moving to another state together. Her real estate agent has done nothing to help her. I know you probably hear this a lot, but I am telling the truth. The agent won't even show the house. He calls and tells her he is busy and is sending someone over to look, and we have to show it ourselves! Over the past 14 months he has sent a total of 4 buyers and he has never shown it once! He also brought us the open house signs so we can have an open house hosted by us!! I don't know how she ended up with such a long listing agreement, She only renewed once, which was in february this year ( wish she hadn't) she said she renewed for another 6 months. When I called the reale state office they informed me the listing run out in February 2011!! I told her to go to the real estate office and get a copy of what she signed but she won't. The problem is she is friends with the real estate broker and won't say anything. I told her a friend would not treat her this way. I read the first listing agreement and it says nothing about the agent having to show the house and nothing about the agent having to host an open house. Is there anything I can do to terminate this listing without her??? Is this the way agents behave?? We sold our house by ourselves in 2 months! I would like to sell my mothers without this agent. I fell he will be getting a commission for doing nothing!! What can I do, leagally?? ..
By Anna Stout, Broker,  Thu Oct 28 2010, 07:49
Tara

Great article. I just had a potential buyer express concerns about the uncertainty of the market. Good insight for both Buyers and Sellers.
By Dee,  Thu Oct 28 2010, 08:00
The reason why buyers are NOT purchasing is due to the following reasons (not all inclusive)

1. They do not have that income with job lossess and more lost jobs to come
2. Credit has been ruined from new credit laws from this administration and job losses and the banks
3. They have no one to borrow from being in the same situation
4. More foreclosures are yet to come with 11,000,000 (MILLION) in the waiting. Not even the commercial buyers can get loans to up-grade or bring on new workers
5. Jobs are being held back as companies don't know what their tax burden is going to be and the health care we never wanted or asked for. It reaches deeply in pockets totally by 2016, but new ones in January will hurt EVERYONE. What ever happened to "We the People?"
6. Most people selling houses can't afford to give away litle meaningless comps as suggested above
7. Foreclosures are NOT trustworthy and NEED work NOT knowing how much. With these houses, their mortgages were immediately bundled up and sold to China and others. This idea for a moratorium is setting owners up to fail just like the oil in Louisiana moratorium COST jobs and did nothing positive since removed.
8. There have been many articles written about home owners given permission by their banks who have come back years later to the seller to say they owe the difference.
9. It's NOT fear of the buyer but TRUE facts of their situations; it is NOT true the home bubble has lessened. Figures were incorrect from the last time to seem like sales are going on. Empty houses are bringing down their neighbors homes and equity value. Crime has risen.
10. Making people YOUR buyers being forced to buy by saying the housing market bottom hit and force a sale, will find intelligent buyers avoiding the sell as car dealships do. They will RUN!
11. What good would 0% interest rates be when there is no job or the job number is so much higher than reported. People have fallen off the roles to collect as they exhausted their checks an giving more will just make the deficit worse. Others have given up looking. Still others enjoy their unemployment checks as they collect on jobs under-the-table. These are NOT paying into the tax base! It's NOT that they WILL NOT buy, they CANNOT
12. Desperation selling----trying to get buyers from where you work or college campus. College campuses students are NOT buying or staying in a dorm. They get together as 2-4 people and rent a house for $2000-4000 with a pool! That means the average person can't rent in their college towns when rents were $400-600!
13. People do NOT know their jobs will last 7 years or they may be transferred and can't sell their home from pushing sells like car dealerships needing that quota for the end of the month or end oif the year.
14. Let's start looking at the buyer AS a PERSON not their flawed credit scores and disinformation on them. THIS is too much like Portersville and not Bailey's Town in "It's a Wonderful Life."
15. Arlington, Va. and Washington, DC is like another country outside 3rd world America!
16. Only the mega rich can afford a retirement home or vacation home. This is REAL LIVE AMERICA out here. Get your heads OUT of the sand. YOU are here to make commissions which have fallen greatly. YOU don't care about the buyer or seller unless the 2 of you worked together to help the average unemployed get over their shock and figure how to pay their necessities.

Myself and a nephew have rented our homes we no longer live in for FREE or as they can pay. My home is many states away with NO property manager. I have look-outs. THEY ARE SO GRATEFUL!!! When they are fully gainfully employed, we can raise the rent or start charging it. There is even handy-people who do work on the home instead of rent. It's a win-win situation.

It's time, PAST TIME, to help others so YOU will be BLESSED.

A story impressed me on the upper East Coast years ago when the factory that made the town and provided the jobs and the jobs from it and the tax base for the town, burned to the ground in the winter. The owner looked at his employees and said he is NOT only going to rebuild to give their jobs back, he paid ALL their wages and benefits for 1-2 years. These people and their families were so shocked, when their jobs came back, they worked harder than ever! Let's GET into the GIVING and THANKSGIVING season of OUR lives.

This is NOT against sellers and buyers but facts from many sources. GIVE FIRST. WATCH WHAT HAPPENS!
Homeowners can do this as well as sellers and banks and those who became investors out of this. DO THE RIGHT THING!

AND STOP TRYING TO SELL IN THIS COMMENT SECTION; we KNOW WHAT YOU ARE TRYING TO DO!
By Joseph Artysiewicz,  Thu Oct 28 2010, 08:02
In my opinion, until there is a sence of urgency by the buyer that price and/or mortgages rate increases are permanet, the market will remain flat. In Delaware, it seems that the majority of buyers are those transferring in to the area. When the market was at it's peak, buyers would commit to a full price offer on a house based on pictures alone.
By Paul Heim,  Thu Oct 28 2010, 08:04
Big part of the problem is many people keep feeling like another shoe may drop. As an eventuality interest rates will rise and yes inflation may very well come, but that isn't all bad. It actually makes buying a home more practical as inflation actually serves those who own a mortgage debt. (not espousing wanton debt or irresponsible spending) Ask your parents what they paid for their first home, maybe 20k? But that was a ton of money for them back then, see how inflation ate that debt to their favor? Current interest rates are almost like free money but please do not over extend yourself. Be practical, you don't have to have that McMansion even if you can afford the payment. Fundamentals are everlasting and always a safe bet so be smart and be an invested home owner.
By Shannon Hughes,  Thu Oct 28 2010, 08:09
This is a must read...it captures many of the points buyers are bringing up right now and there are so many factors currently in play, especially in California, that it becomes more important to sit down with your buyer (if you can find one) and address all concerns and questions face to face, back to the basics of being a good realtor. Nancy Trube's point above it a good one, and one that I have used successfully to capture a buyer's full attention:
"I advise buyers that we don’t know the “future,” but we know “now.” Now the rates are in the 4% to 5% range, which can translate to tens of thousands of dollars in saving when compared to a 6% -7% rate. They may not “profit” through appreciation per se, but they need to be shown that a lower interest rate will save them money long-term."
By Howard Hughes,  Thu Oct 28 2010, 08:09
It's all about unemployment and underemployment as America is becoming a third world country for we have far too many unskilled beings with nothing to offer society except as an albatross around the country's neck. These zeros somehow get a mortgage backed by the govt. and then when they can't pay, its the rest of us that have to carry the burden.
By Lauren Gardiner,  Thu Oct 28 2010, 08:25
When will it end?
By Elizabeth Dana,  Thu Oct 28 2010, 08:25
Great article, Tara. Thanks for giving readers some insight. It's important for buyers and sellers to read and hear the realities of our market, and not the continuous negativity from the media. Thanks again!
By Omi S.,  Thu Oct 28 2010, 08:30
I'm offended. I'm not waiting for the market to "bottom out". Back in May, we originally wanted to buy our own home after our Landlord lost his home in a foreclosure and had to move into the home we were renting. We had a little over 60 days to find a place, and with all we were faced with, we realized we did not have the complete amount saved up to buy a home (even one we weren't totally in love with), and after talking to several realtors, finding out the process could take over 90 days.

We looked at Short Sales, ForeClosures, and Traditional Home Sales, and we were not happy with what we found within our price range (regardless of process). We ended up being stuck in an extremely high priced rental, in the area we were interested in buying into, but only because it was our only option for keeping our Medium-Large Sized Dog. I'm offended that you suggest I'm waiting for the housing market to bottom out when all of the houses in this area are still being priced at pre-2008 prices, which do not reflect the current quality of the Historic neighborhood, the uncertain economy, increased crime rates in this specific location, care/maintenance of the city, or condition of the available houses.

Outside of this neighborhood, I would like to eventually re-locate to Western N.C. I have family down there, but have found home prices in that area to be extremely unrealistic due to available jobs/commuting, and available technology (the specific area I am looking at barely has DSL Internet, Reliable cell phone providers, not to mention tech jobs). Yet prices and expectations are even beyond my current living situation. Up where I'm at now, if I could break my overpriced lease, I can now afford a brick, 2 story, 3bedroom with garage and a "small" fenced yard for my dog. Down there, the same price will get me a 2 bedroom trailer on a LEASED Lot. Are you kidding me? And there aren't even any jobs in that area to pay for that trailer (Ive looked at all job skillsets I am qualified for, IT, Communications, and even Manual Labor and Customer Service).

Maybe everyone reading this article should shift focus, and consider that we may become a nation of Renters and TownHome Owners again, just like in the mid-late 80s (all of which, I just remember being a child living in a Townhome).

I understand that some realtors will look at me as being "unrealistic" or not having the "correct" perspective, but I am sharing a common sentiment shared by several associates I've met at work and through friends who are also looking for homes in this troubling market.

With the lack of jobs in some areas, and constantly shifting uncertainty in the job climate (what I see in the news differs from what my friends and parents say at the dinner table when we meet up), realtors are losing money because less people are being "stupid" with their money, though there still seems to only be undesirable or unrealistic offers out there. Every penny I have needs to be put toward the best, reasonably priced decision I can make, and I have yet to see those opportunities out there.

By Nazila Pace O'Flanagan,  Thu Oct 28 2010, 08:33
What a great information. Thank you for spending all that time sending this information . I truly appreciate it and it definitly helps me allot.
By Tom Inglesby,  Thu Oct 28 2010, 08:37
Employmnet is the key and here in Portland we have some neighborhoods doing great and other brand new areas that cannot give new homes away that are 3 years new. This is a must read for all agents so they really can understand what is happening. Portland over the past 25 years just saw a modest appreciation rate then a spike and we will be going back to that once we turn the corner to flat to 1-2% a year gain like the good old days. When a buyer did not ask how much money can I make in a year or two when I sell, they just lived in the house and that was not part of buying or selling.
By Mary Flo Cleaver,  Thu Oct 28 2010, 08:42

I would not have a financial institution prepare various loan options for open houses because buyers need to fall in love with the property first & then deal with mortgage options. Too often, the buyers focus in on the #'s instead of the property & then becomes scared & "resistent" & walk away.
By yoshidad,  Thu Oct 28 2010, 09:08
I read some of the reasons, but there is one that effects me that is not mentioned.

I am working with a very knowledgeable realtor on my side, she is great. The problem is with the other side, they have no clue selling a short sale. Unfortunately, that leaves us with the wait and ponder issue. Either the banks need to step it up, or re-education for RE teams on milestones to achive success on sales. Otherwise, I cannot pull the trigger and buy my home.
By Li Wright,  Thu Oct 28 2010, 09:10
One last reason: A house isn't what it used to be. A house in my mom's day was a house you lived in until you died. Nowadays it's an "investment" and a piggy bank to some folk. And some folk after being burned in the housing market and knowing how the mortgages are chopped up and divided, would rather simplify and just rent.
By Harrison K. Long,  Thu Oct 28 2010, 09:32
Like your seller solution to number 6: "Price your home well". It's important that sellers in CA during these uncertain economy times understand that they must be aggressive and competitive, rather than putting the for sale out there with a hope and prayer and that they shouldn't let overpricing lose their legit buyers.
By Aaron Mtuanwi,  Thu Oct 28 2010, 09:46
I love this. Thanks for the time taken to put this up.
By Anne Hatch,  Thu Oct 28 2010, 09:48
Great article. I found much good information to pass on to my sellers.

Anne Hatch
Boulder, Colorado
By Agnes Gargiulo,  Thu Oct 28 2010, 09:58
Great Article about the Insight on Buyers and Sellers "Psychology".
By Shiela-Marie Ventura, Top 1%,  Thu Oct 28 2010, 10:02
Great article! Although as an added positive I do see govt. pressure on banks to 1) focus on pre-foreclosure sales (shortsales) and 2) steadily release assets as opposed to flooding the market like we saw in Q1'09, creating the 'bottom' - This would align with the program goals of HAFA
and Stimulus. Best, Shiela-Marie Ventura, Relator, CSP - Silver Creek Valley
By Shiela-Marie Ventura, Top 1%,  Thu Oct 28 2010, 10:04
Great article! Although as an added positive I do see govt. pressure on banks to 1) focus on pre-foreclosure sales (shortsales) and 2) steadily release assets as opposed to flooding the market like we saw in Q1'09, creating the 'bottom' - This would align with the program goals of HAFA and Stimulus. Best, Shiela-Marie Ventura, Realtor, CSP - Silver Creek Valley
By Michelle Chenault, SFR,  Thu Oct 28 2010, 10:07
Love the comments and different perspectives as much as I loved the article. Thanks all for giving your 2 cents on how these issues are affecting us all! Michelle, Clearwater, FL
By Paul Francis,  Thu Oct 28 2010, 10:08
Nice post... don't forget to run those rent vs. buy calculations... ;)
By Sandi Garcia,  Thu Oct 28 2010, 10:21
Buyers are being extremely cautious, but they are out there on the fence. Without the tax credits there is no urgency and many employed buyers fear they could be cut or hours reduced as they are watching it happen to others. So it comes down to a lack of confidence in the economy once again. Once the market does start to come back we will probably see another frenzy to get in. I don't think prices will go down significantly more, and there are so many homes to choose from right now, I still beleive with the current loan rates it is still a great time to buy, without much competition! Sandi McGinnis-Garcia, Realtor, Santa Cruz County, CA
By Laura,  Thu Oct 28 2010, 10:32
As a future buyer, these are my concerns as well, bu mostly regarding whether the bottom is really here or not. I see prices dropping daily on homes I am watching and sadly, none of them are so fabulous yet to get me to pull out my wallet just yet. I don't feel that the bottom is here yet (in Los Angeles area) because of those dropping prices. I have only seen one home that was of interest where the seller had raised the price, and next to all the others who had dropped theirs, this one looked ridiculous. Hopefully, the next year will provide good news for buyers like me so that we open our wallets!
By Nancy LaVallee,  Thu Oct 28 2010, 10:39
I've found that you can ask the seller for that $8000 that your buyer might have missed in a tax credit , and a motivated seller is glad to make up the difference. Excellent article, I'm in the Seattle market and found most of this article pertinent, although I think Bof A has lifted their foreclosure freeze now. Thanks Nancy LaVallee, Realtor, Seattle,WA
By Marilynssardella,  Thu Oct 28 2010, 10:52
Has anybody thought of the prospect the BANKS DO NOT want to lend BECAUSE interest rates are TOO LOW! WE have EXCELLANT CREDIT...are willing to pay down our mortgage to realistically what is is worth on the market today and THE BANK will NOT let us refinance an adjustable rate we have with them! ALSO our mortgage has been PAID ON TIME FOR 4 years now! WHAT IS THAT ABOUT!
By Paul Lacey REALTOR,  Thu Oct 28 2010, 11:01
What a great article and post! This gives both, buyers and sellers, something to really sink their teeth into the reality of the current market condition.
By Claudia Anderson,  Thu Oct 28 2010, 11:47
Hey Tara-Great info...thanks for the knowledge!
By Hilary Miller Holder,  Thu Oct 28 2010, 11:52
Great Read! Thanks for sharing!
By Shirin Muldowney,  Thu Oct 28 2010, 12:35
This is very true about our market here in Buffalo, NY. I match the buyers with the mortgage broker, get them pre-approved, show them abut 8-12 remodeled/updated houses, yet they are hesitant to commit in buying one. Reasons why?! They're thinking of moving where the job is or not until their house is sold. I think this kind of articles will help the real estate market which eventually help the economy.
Thank you for sharing!
By Frances Flynn Thorsen,  Thu Oct 28 2010, 12:53
Great advice and great perspective coming from the seller point of view. These are times that separate serious real estate agents from the rest ... the cream will rise to the top. Smart sellers pairing with smart agents will reap the bounty in challenging times. Kudos on an excellent article!
By Chad Power,  Thu Oct 28 2010, 13:13
Tara,
Great read for diversified audiences--Agents, Brokers and of course...buyer's and seller's! I enjoy a Broker/Agent that "gets it". So many agents think of the "now", and fail to look at the aggregate picture that you clearly depict and shed light on KEY issues related to most real estate markets across the U.S. There is minimal inventory (I'm in Socal), that is mainly Short Sale inventory that are distressed sales, which investors are picking up. However, some more analytics for you agents, there are 33% LESS open contracts on properties (esrows) now compared with April '10! This is primarily due to the first time homebuyer credit funds being depleted officially on Aug 15th. If you didn't have a buyer in escrow by April and closed by Aug 15th, your buyer lost out on the $8000 tax credit. I predominately list for investors because I've proven myself to understand how to maximize exposure in this enemic market. Most agents can't equivocate analytics (lucky for me), Combined days on market, List-to-sell ratios, how much exposure you as the agent compared to the average agent in the area. He/she who can syndicate through the most sites--and most importantly, who is able to understand fundamentals like we need to drink water (e.g. anwering our phone, prospecting in neighborhoods where are signs are, utilizing sites that are affordable or free to yield the highest ROI for the seller). We must bring value to our seller's and buyers by understanding all the dynamics available to us, and relate the information the market is churning out as best we can. In return, you will inevitably have buyer's and seller's to deal with, because we are selling a need in life. Relating to Maslow's Hierarchy of Needs, everybody still needs shelter, people will have to scale down, pay off revolving debt to qualify on the DTI ratios, and live more conservatively than we did as Americans between 2002-2007! There is no more ATM machine out of the home equity. Lastly, I do feel that the banks/gov't (same thing--LOL), are utilizing Keynesian (supply-side) Economics that they felt would work to keep prices stable from falling into double digit depths--once again. I feel it is still a very strong possibility (double-digit percentage drop in price) if...
*mortgage rates go up at all(and remember folks, look at what the 10-year bond is doing--not necessarily the FED);
*unemployment maintains at 12.8% in California(on a side note, Riverside County is 15.3% unemployed, Orange county is trending much stronger, mirroring the national average at 9.6%, San Diego is a little weaker at 10.6% versus 10.3% in '09);
*If banks release more "Shadow inventory" we've been hearing about for the last 2 years;
*More gov't taxation on real estate purchases, or the removal of the mortgage deduction (they're trying very hard);
*If the stock market were to drop drastically or crash. This is another anamoly that's currently happening that the real estate market is dismal, the stock market is doing averall--pretty well, and rates are at unprecedented lows. Even though unemployment is still a major concern. This is truly an anomaly!
By Mitzi,  Thu Oct 28 2010, 13:54
My take on why buyers aren't buying: 1. We do not trust the industry (s), especially if you call yourselves an expert. What you are expert at is manipulating the consumer so that you can make money for your own bottom-lines and ruin the rest of us. You, the industry, created this monster and you don't want face the consequences. You still want to recoup the payouts that you fraudulently CREATED for yourselves by manipulating and ripping off the buyers. The brokers, as well as others in the industry did all kind of crooked things to enrich themselves even if they were destroying the buyers (which you foreknew would happen, but you only cared about YOUR bottom-line).

2. The values are still too darn high/inflated, especially here in California. All of these ancient one bath homes, many with multiple bedrooms, are priced at modern-day prices which is utterly ridiculous. Everybody still trying to make a crooked killing on their sub-par properties even in substandard neighborhoods, that you want to sell "AS-IS".

3. Difficulty to get financing due to the crash that the lending industry forced buyers into, so that they could get grand-theft returns, thus ruining buyers, their credit, the nation, and the world.

4. Misuse of Capitalism which is whatever the market will/can bear. Well, capitalism was manipulated by unscrupulous Lenders, and collateral entities, forced markets into crawl-spaces that did not fit. These creatures forced capitalism into a 'Humpty-Dumpty' character. They tried to force the market to do what it could not sustain and was not meant to sustain. That's because they are CROOKS. All these crooks know is that they want "mo money". All of you!

They are still at it. They are now trying to brainwash potential buyers to get them out of the mess they created which will cause the new buyers to also default. But they don't care -- they will have their money. Round and round we go and where it stops nobody knows.

Buyers, my advice is to ignore the experts and let Capitalism work the way it is suppose to. The same way that Capitalism works for the poor. If we, the poor, make poor choices we have to live with it -- nobody bails us out. The experts think that is right for us to suffer, but when the poor choice is committed by themselves then welfare becomes a good thing for themselves because they don't think they should endure circumstances. But, they think the poor should suffer their consequences, because "we're USED to it."

They want to keep the poor in their place and want to add more poor people to the mixture. After all, we are here for them to suck on and bleed. We are the fodder used to make and keep them rich.

Listen, I am one of the nobody's with little education but I have the common sense and mother-wit to see that the RICH have high-jacked our government. Everything done is in favor of the Haves, including laws/legislation that allows them to rip-off the little people with impunity. Every thing done in favor of Big business and NOTHING but a swift kick for the rest of us. Big business don't want to pay fair wages and don't want to pay fair taxes. They keep we-the-people over a barrel because we depend on them for jobs and they show they don't care about us by giving American jobs to anyone but us. Yet the poor idiots still go out there and vote for them to allow them to continue to keep us over a barrel and their foot on our necks. Poor dumb people are between a rock and a very hard place. This makes me think about the revolutions of the past and why those people were pushed to overthrow their government. Only a Revolution can turn things around unless the Lord returns and take over His World.

How ironic, here we find ourselves fighting for the same reason the Europeans came here in the first place. Goes to show that IF YOU FORGET (or ignore) THE PAST you surely will repeat it ... and we have. How very sad.
By Aaron Evans,  Thu Oct 28 2010, 13:54
If the bottom has already hit, this article would be titled 6 ways to stand out in the market, or 6 ways to get the highest bid possible.

The fact that you not only admit but encourage people to lower the price of their home, pay more in repairs and staging costs to increase the perceived value, offer perks, go searching for potential buyers, pay closing costs, etc. shows that the market is a long way from the bottom.

Where's the bottom? If it takes 7 years to reach parity, subtracting 12% for commision, sales, property, and capital gains tax, inflation (4% in the best of times, 10% or more now) -- your looking at a very very deep bottom without taking into account any investment value. No one is going to buy a home that depreciates. And with a 30% minimum liquidity COST to buying a home, that's a huge handicap, even if the economy stabilized, the inventory cleared, and buyers gained confidence.

In other words, to buy a $200,000 home, I have to pay $60,000 above the value of the property for the privilege and be willing to hold onto it for 7 years just to break even assuming the bottom has already been reached, and the economy has recovered and will stay recovered for the full 7 years.
By Tess Witcraft,  Thu Oct 28 2010, 14:07
Great article. This is absolutely true. Seller's don't overprice your home. Be realistic. Letting it sit in the market for few months would make you end up losing more money because of the mortgage payment you have to make while the property is on the market. ( advice for regular seller only).
By Samantha Lees,  Thu Oct 28 2010, 14:44
Very insightful and the article made valid points for both buyers and sellers.
By Ken Smith,  Thu Oct 28 2010, 17:35
The 800-pound gorilla in the room: employment. Even if you're working, if you don't know if you're going to have a job two weeks from now, if the boys from corporate have been walking longtime employees out the door for the last six months and you think you might be next, no way are you going to walk into a 40-year mortgage on a home, overpriced or not. Ditto a 5-year car note, or a new washer/dryer or refrigerator, or braces for little "Bucky". That's not irrational fear. That's common sense.

We are in a depression, just like the one 80 years ago. Remember how long that one lasted? Eight long years, despite F.D. Roosevelt's best efforts. Except there's not going to be a Pearl Harbor to pull our nuts out of the fire and get us back to full employment this time around. Happy Halloween.
By Carla Wormington,  Thu Oct 28 2010, 17:40
Great article! Thank you!
By Florent Lesperance,  Thu Oct 28 2010, 19:42
The closing cost are too damn high?
By Mitzi,  Thu Oct 28 2010, 20:22
That may be a good article for people who are trying to sell, but BUYERS had better beware. There are too many unknowns about the future. Of course SELLERS will tell you not to worry about the naysayers. The Sellers just want to get those monkeys off their backs and make you pay them to saddle you with it.

You can't trust those EXPERTS who are in the business. They were trusted before and look what happened. They are trying to feed you this false pep-talk because they are sinking deeper and deeper. Let the ones who created this monster ride out their creation like good Capitalists should. I was born almost four years after the 1929 depression so I experienced it and it is very similar to the present depression (yes, depression because that is what this is). The '29 depression did not START to turn around till after the beginning of WWII. This one is much worse because we have more crooks now and more people live in cities instead of the rural areas.

None of you young people are trying to believe that this is more than a bump in the road. But it will take a LONG, LONG, time for a recovery, especially since people are trying to pretend that it is not as bad as it is. I never thought I would live to see the repeat of 1929. But that is what happens when you close your eyes and think it won't happen to you. You big brainy and greedy business have got people to manipulate and ripoff on your way to your riches.

Back then, the powers that were, tried to put rules in place to prevent the same thing from ever happening again, but oh no. The young folk thought they knew better and ditched the rules of the old fogies and got on with where their brilliant minds were leading them (to their riches).

Well, you got it --- now roll with it Richard.

People keep what little money that you still have under a mattress or in your safe Credit Union. These cockroaches are trying to slick you out of what ever little savings you may have lying around. See what the article is saying -- that some (still) have ways for the unqualified buyer to get loan. That alone tells you they are dirty rats trying to find a way for you to make bad choices. Then, when that stuff hits the fan they will say "they shouldn't have tried to buy beyond their means." See the victim is the one to blame. That is what they did before. Let them keep their problems or reduce those prices to rock bottom or let their properties rot to the ground or they can tear them down or burn them. Let CAPITALISM work!!
By Jason L,  Thu Oct 28 2010, 22:27
I'd say there are actually *two* gorillas in the room. Other than employment, there's also overall consumer confidence. The two are tightly intertwined, but consumer confidence generally lags behind employment. Therefore, I agree with Ken... we're in for a marathon.

Jason
http://www.california-realtor-directory.com/Napa-Realtors
By Patrick McNeley,  Thu Oct 28 2010, 23:26
In our local market (Pierce County, WA), I've seen banks dumping inventory and driving down prices. I recently closed a Fannie Mae reo for$155,000. The appraisal came in at $190,000. and the appraiser was using comps in the $225,000 range with deductions for needed repairs.

The previous owner had "stolen" the kitchen, hot water heater, appliances, light fixtures, even the outlets. We had the home put into like new condition for about $16,000.

The banks are shooting a hole in the bottom of the boat. When I'm representing the buyer it's a good thing. (For my clients). For market stability, it is not a good thing.

This is a tremendous transfer of wealth being subsidized by the taxpayer.

http://www.BuyPierceCountyForeclosures.com
By Albert Clayton,  Thu Oct 28 2010, 23:41
superb article, well written, factual and very helpful to persons such as i, living outside your borders but keen to do business in the real estate market in the USA
By Jan Milstead,  Fri Oct 29 2010, 00:34
Interesting perspective and responding posts...
By Lisa Butler,  Fri Oct 29 2010, 04:26
Interesting article, thanks for providing your insight. I agree with several other posters. I am potentially in the market to purchase, but don't have much, if any, to put down. My credit is good enough to qualify me, but the homes in my price range are ridiculously priced, based on 2010 appraisals. Banks aren't going to loan $40,000 extra on a mortgage because the homeowner can't be realistic about sale price, so the homes languish on the market.
By ** Stephan von Jena **,  Fri Oct 29 2010, 07:43
Good points, but one component the real estate market needs today is a clear Fed regulation forcing banks to liquidate existing or future foreclosure inventory within a short 3-6 month defined period. Although painful for the overall market in the short term (~12 months of driving prices lower), it would remove this highly negative component for most buyers thereafter, and would get the overall market back on solid - not speculative ground. Buyers would again cycle through the entry to mid- or higher priced homes and thus overall valuations would also begin to trend higher. All the financial components are in place to facilitate this corrective cycle. Under the current “shadow inventory” approach where banks have no incentive to move properties (and they don’t), the pure volume of inventory and the expected addition of further depreciated inventory is preventing the normal appreciation cycle from beginning. It’s the leadership in Washington that needs to force this process.
By Linda Lorenzo - (214) 578-3131,  Fri Oct 29 2010, 08:19
Tara, thanks for a good post, something we all can share with our (often unrealistic) sellers. Good ideas for us as agents to help sellers understand the current market.
By Sandy Slinkard,  Fri Oct 29 2010, 08:30
I laugh every time Obama opens his mouth especially when he mentions that the lower interest rates are not being taken advantage of. Sure its lower but now It is a lot harder for people to qualify. Its like the "carrot" is being dangled infront of any prospective buyer just to be jerked away at the last minute!! Why does the government think we are blind as to what they have pulled? Obama is trying to "spread" the wealth...what a laugh. What he is trying to do is have everyone loose their jobs, homes, everything they (we) have so we will be just like the ones that do not have anything. Not taking into fact we when to school, kept our noses clean, stayed off drugs and worked out butts off. We did not expect the government to take care of us...we took care of ourselves. We, the ones that strived for more are expected to give to the ones that have no goals except to rob and kill. Now we have a nation that is being ran by an illegal and wants us to take care of all the other illegals! Obama's made the statement she was ashamed of this country but was proud After HE became president!! Why, she had everything given to her by people in Chicago as he was....they make me sick. I do NOT regard him as my president or her as the first lady...they did not work for it....it was given to them.

We are part of the blame; we let our jobs go off shore. We let them take away a lot of our rights. We let them allow illegals into this country. We allowed them to let illegals have EVERYTHING free. Now it is time we stop allowing the government and we take our country back and build it back up!! I have never met a polition that was not greedy! Those that were good, honest men became lost as soon as they got intangled with the "good-ole-boys." Given the choice, either change to their way or their political career was over!!
By Carol Zelonis,  Fri Oct 29 2010, 08:35
Great points from all. It is a tough time, but we will all get through it. Carol Zelonis, Realtor, Charleston SC
By Dawn Forgione,  Fri Oct 29 2010, 08:42
Love the article. Great objection handlers and solutions to most of the challenges we are faced every day with as real estate professionals, buyers, and sellers. Can't wait to share it with my associates and clients!.
Thank you!!
By Talever,  Fri Oct 29 2010, 11:32
The dream of Real Estate ownership may be gone for many Americans, No matter how low the price and how low the interest rate is. If we as a country don't start creating jobs and rebuilding there will be fewer and fewer Real estate sales and more foreclosures The folks in Washington are clueless.. The bottom of this market is still a ways off. Until people go back to work and until businesses as a hole are actually told what the "New Rules" will be there will be few new jobs created. I had 5 employees in 2006 now I have none. I will not hire anyone until I know exactly what it will cost to do business. I know many other business owners that feel the same way. Buying a house in this uncertain market is at best a 50/50 bet. There is no reason to rush out and buy anything. With few exceptions Housing is not going up in price anytime soon.
By Danny Kumar,  Fri Oct 29 2010, 11:43
thanks for a good post
By Ric Mills,  Fri Oct 29 2010, 14:54
Don't let the media get you down. There is still a good market out there and lot's of buyers. If you decide not to participate in the "negative attitude" you will do very well aginst those that don't.
By Tamara Schuster Broker, Agent,  Fri Oct 29 2010, 15:02
There are so many variables out now that are effecting the market. We all must realize that people need a place to live. We must make sure that the home buyer is educated on the current market and do our best to provide top service and answer all questions and concerns they may have. This no longer is a part time profession and you must make sure that you have made the best decision possible when buying a home now. We can always second guess ourselves once a home is purchased but with proper knowledge the new home owner will feel secure in their purchase.
By Perky & Jody Magee,  Fri Oct 29 2010, 15:45
The article could have been written more succinctly.
Problem: housing not selling.
Reasons: consumer confidence & umemployment.
Solution: price properties at their market values, keep adjusting them if necessary, and movie on.
By Jenny609,  Fri Oct 29 2010, 18:54
We bought our townhouse in 2002 for $369,000 (before the worst of the bubble); we put in a new kitchen and fixed up the master bath (mold,etc.). Between 2002 and 2010 our property taxes went up over 42%. We no longer have any relatives living in this state but cannot get our money out of our property and move (no mortgage, all improvements paid for). Your best advice is we should lose several thousand dollars and pay you a fee?? You are saying to those of us who bought our homes with real money "Suck it up; we need your money more than you do".
You are also saying your buyers are so stupid they cannot see a home's potential unless it is staged to sell a "lifestyle". I have to agree with others who have commented that we have lost our way as a country although I am still (gasp) an eastern liberal who would be considered by many "not a REAL American" though I was born to US born citizens 71 years ago. Our extreme political divide is only adding to the economic uncertainty; we cannot elect leaders who tell us the truth because we don't want to hear it. We are living in a different global economic reality and living so much longer the old economic models don't apply. This recession/depression will take several years to shake out and we will not be the same country in 2020.
By Asha Dave,  Fri Oct 29 2010, 20:59
Great article, But to all buyers and seller they need place to live, my question is why rent when you can buy,
Nj Central Nj, we have so many condominium homes avialbale where they pay less in mortgage payement then
rent, but all buyers are waiting for what ? i do not know, i tell all my buyers if you can not afford now you will never buy a home, as prices are lowest, plus you can negotiate plus intrest rates are lowest in decade, what more you want.FHA is giving loan to first time home buyers with low down payment if they qualify,
By Craig,  Sat Oct 30 2010, 04:51
It is encouraging that realtors are finally starting to see the problem as sellers on the fence rather than buyers. I don't expect realtors will ever come right out and say that homes are overpriced for this market, but at least they are hinting that sellers should get real.

Since I am not a realtor I will come right out and say it: Face Facts. Lower prices is the only way this huge inventory is going to clear. Low rates aren't getting it done and realtor happy talk isn't going to do it either. If prices don't adjust to get more buyers off the fence, then the market will continue to be unbalanced and inventories will keep building. Get real now or have it forced on you later.
By Bob Kennedy,  Sat Oct 30 2010, 05:38
The Los Angeles, Ca. real estate prices are far higher then comparable properties in most other areas of the country. These property owners absolutely refuse to accept the fact that their houses are worth 30% to 40%
less than they were in 2006-2007. Some of these places have been on the market for more than 2 years. You cannot find anything other than a foreclosure or a short sale for under $300,000. When a foreclosure worth the
money in a desireable area is released from the shadow inventory it is snapped up by brokers or well heeled
investors with access to inside information. The majority of the foreclosures that do make it to market are priced
at virtually the level as a normal resale. The financial institutions are attempting to prop up values so they will not have to absorb as big a loss as they would if it were priced realistically. This in turn translates into appraisals being nowhere near what they need to be for financing purposes.
Not to mention the fact that the federal government, with their "loan modification" programs is trying to keep people in houses that they were not qualified to purchase in the first place.If current trends continue %75-%80
of these people will re-default after the modification is completed. This of course slows down the foreclosure process thereby continuing to prop up values.
Most people do not want a mortgage obligation of more than $1000-$1800/mo. That is tough to achieve with a finance balance of $350,000-$400,000 for a very basic property in a decent area.
By Kathy,  Sat Oct 30 2010, 09:26
Case-Shiller has NOT called a bottom, they are careful not to do that. What they provide is analysis based on longer term data than the NAR or other biased groups. What they have noted recently is the price point for cities in terms of returning to pre-bubble years. Some cities, like Detroit, have declined back to the 90's in terms of price, but that city is dealing with more than just a real estate collapse, the entire economy has collapsed. What this proves is that all real estate is local, and potential buyers would do well to keep that in mind, and be careful to get their information from sources that are not biased, one way or the other.
By Bob,  Sat Oct 30 2010, 10:10
I have scanned most of the comments and there are some good ones out there. You sure can tell the real estate peeps from the non RE peeps. I'm working with a few different real estate folks in the La Quinta, Palm Desert, Ca. area and it's unbelievable how they tell different stories about the same issue....they are a breed of their own in the desert!! I had to email and tell a couple of them "tell the truth and shame the devil", because they exaggerate soooo much....it's really comical!!

It is difficult getting a loan from one of the big four banks because they drill down to the finest detail. My wife and I are in the 800 FICA range, 40% down ($700K+) for a second home and got rejected because of some minute issue. Bottom line, no big deal for us, but I feel real sorry for the hard working folks out there who deserve to have the pride and joy of owning a home and CAN afford it but get rejected.
By Alex Foraker,  Sat Oct 30 2010, 13:21
All very relavant information to todays market. Thanks for posting!
By Michael Adams,  Sat Oct 30 2010, 22:37
This was a very informative article. I just shared similar points with a prospective NJ seller. Most importantly, I stressed the importance of pricing the home "right" at the begining. Secondly, since the houuse is vacant I strongly suggested that the house be staged. I also addressed market trends and how to overcome the negative ones, with agressive pricing and marketing. I love the idea of promoting the fact that a well priced home is NOT a short sale or foreclosure.
By Susan Gough,  Sun Oct 31 2010, 14:10
Good artivle. I agree with Doug,buyers are still wary. I think buyers still see a floating market and think they can get a better price and some agents are exposing the same thing!! I do like the idea that the home should be marketed as not a foreclosure or short sale.
By Laurie E. Spencer,  Sun Oct 31 2010, 18:21
With regard to item #1, go a step further than listing the loan options and suggest they actually speak to a mortgage professional and have him or her run the numbers. If the buyer is not yet qualified to get a mortgage, they can give them good advice on what they have to do to get there. I wanted to buy a condo but was pretty sure I wouldn't qualify for a mortgage because I could only do the 3.5% down payment and had some debt, and after speaking with a bank's mortgage officer, I found that I could get a pre-approval and I also knew what price range I would be looking in. Then, I went out looking to see what was available to me in that range. I found something for a little less than I was pre-approved for. Other units in my complex are now on the market, and they may drop to a little less than what I paid, but I plan to be here for a long while. There are others out there like me, lifelong renters, who are looking for a place of our own more so than an "investment" and not as concerned at this time with a big future return. If people want to buy but seem shy about their inability to obtain a mortgage, encourage them to speak with someone. They might be pleasantly surprised, or at the very least be able to make a plan and a budget that will enable them to buy in the near future.
By Cbh,  Mon Nov 1 2010, 04:31
Another point for buyers- rent will go up every year, your mortgage is locked in. Look at rent prices over a ten year period, and if it only goes up 50 a year-...People seem to think short term. I also wonder what will happen t rents when many people can't buy. When loans were easy many people go out of the rental market, it was too hard to find a decent renter, it will be much easier now! Bottom line, don't complain about your rental price in a few years- I suspect they will be higher than owning, and you could have locked in by buying.
By C. Jeffrey Moore,  Mon Nov 1 2010, 07:55
Great article, todays market certainly is challegeing. After tuesday some more buyers may come out from shadows so get out and vote
By Dave Kearney,  Mon Nov 1 2010, 08:14
Great article! One thing I tell my buyers is owning a home is not just an investment. Sure, nobody wants to buy a home and watch it go down in value, but owning a home is about a place to raise a family and make memories. Lots of renters are waiting for the bottom and every day I see homes that are priced well and are perfect for them and still they don't buy! It makes me crazy. Prices are down, interest rates are low, the mortgage interest deduction will mean paying less taxes, what else do you need? With new housing construction at a virtual standstill, demand will be greater than supply in a few short years, prices will edge back up... I think all of the economists agree on that.
By Kevin Walton,  Mon Nov 1 2010, 11:10
The 203k Streamline loan needs to be embraced by Realtors to help move things along as well. I'm a loan originator and I've met several clients who are excited by the Streamline but only to have their Realtor and listing Realtor say "we don't like this program". In one case the home had been on the market for over 6 months and it wasn't a foreclosure. The property did have issues (broken heater and window) but the Realtor was happy to wait for the cash investor offer....which never came. The Streamline would have fixed it, but now the seller is going into foreclosure and becoming another statistic. We all need to think outside the box a bit more.
By Courtney Cooper,  Mon Nov 1 2010, 12:41
good advice - I have sellers that don't want to "bid against themselves" and it was difficult getting them to get the house down a bot, but the market proved it necessary and luckily we did get it done.
By James Rodgers,  Tue Nov 2 2010, 07:24
Very nice insight
By Mark Jacobs,  Tue Nov 2 2010, 12:22
Very nice post  http://www.MarkJacobsRealtor.com
By Doug Reynolds,  Tue Nov 2 2010, 12:34
Great post. I enjoyed reading. Thanks
By George Flood,  Wed Nov 3 2010, 12:48
A very well written article that is valid for many markets across the country. Thank you for your insite, and I will pass this along to clients I know who could use the information. Thank you
By Blaser Yoakum Team,  Wed Nov 3 2010, 14:51
Great article. Thanks!
By Connie Barnes,  Wed Nov 3 2010, 17:16
Today's Fed action may be the beginning of the end for low rates. Almost guarantees a rise in inflation and rates.
~http://miniurl.com/64340
By Craig Bassignani,  Sat Nov 6 2010, 07:48
It will if QEII pushes rates to 3%! and Watch "Cost to Exist" (taxes,fees,energy,food,etc,etc) in our country go up.. If rates can come down, prices should rise

Given all the coming loan repurchase demands AND Putback Purchases for "Breach of warranty and representation"(READ:FRAUD).. And bought Credit Default Insurance to reap more benefits of Manufactured Condition.. nice..many have come to this conclusion..

Who knew that when we were participating in a "Sound"(and I use that term very loosely) Financial system we were helping set up Economic Destruction..?

signing for a mortgage as we come to find out has cost jobs, devalued dollar, state and local budgets decimated, reduced safety services, slashed school funding, etc etc..

little did we know so many ticking time bombs lie just below the surface.. and that's not counting the first dominoes (Home Loans Going Sour) that have fallen in the last 3-4 years.. sad

Hopefully this can be avoided next time around.. so as not to have so many walk-aways that have realized the ponzi nature of it all..

I'd like you to meet my friend, the 800 pound gorilla... look to your left, he's sitting right next to you..

http://www.esonomacounty.com
By Tuval Mor,  Mon Nov 8 2010, 07:57
Great article,
Thank you Tara!
By Jeet Shahani,  Wed Nov 10 2010, 11:00
Very well written!! Good information for people struggling in the foreclosure market!!
By Janet Willison,  Thu Nov 11 2010, 07:36
Enjoyed the post! Sellers that are selling as a "standard sale" find this market tough! Good post to have that valid price cut conversation.
By Daisygirl28,  Thu Nov 18 2010, 04:18
I definitely agree with the valid price cut as I still see a lot of homes being advertised at a ridiculously overpriced amount.

http://www.youtube.com/watch?v=BvxQ_3R_rzg
By Jennifer Blackwell,  Sat Jan 15 2011, 12:24
Typical buyer rejections. I hadn't considered full-out marketing my non-distressed properties as such, but it makes sense.

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