In today’s market most every one knows that the home buyer is in the driver’s seat. It’s simple supply and demand. There is a ton of supply (houses on the market) and very little demand (home buyers with the ability and desire to buy homes). So, in order to get rid of the supply and bring this whole housing market thing into better balance prices need to come down, interest rates need to stay low and lenders — banks, credit unions, mortgage companies — need to loosen up the money flow.

In the meantime, there are a ton of homes that are either in short sale or foreclosed status. In other words, the home owner has walked away from the house, has stopped paying the mortgage and the house is…just…sitting…there.  This wouldn’t be so bad except the banks are not selling. At least they’re not selling very quickly.  However, the banks are allowing the prices to be advertised at artificially low levels.  Why not?

How This Affects The Home Owner With Equity

If you happen to be one of the lucky few that own your home outright or have a mortgage less than what you can actually sell it for this means you need to have a price your home low enough to attract home buyers.  The few financially qualified home buyers in the marketplace are picky and persnickety and if the house down the street is $10,000 less than your house they may be able to see past the trashed carpet and stained walls.

It really means the home seller with equity in their house needs to “suck it up” and price the house aggressively and keep it in pristine condition.  It also means that when the time comes when an offer is made on your house, you should seriously consider it.  All of it.

• the price,
• the settlement date,
• the type of financing and who the financing provider is,
• the type of inspections being requested and any other contingencies in the offer,
• the request for a home warranty or anything else.

It really comes down to the question: “Do you want to sell your home?”

The Time Factor

Here’s a true story: I was working with a home seller toward the end of the housing “bubble”.  Things had started to slow down but they hadn’t fallen off the cliff, yet.  An offer came in from a buyer’s agent representing a financially qualified buyer (notice how I keep using the term financially qualified?).  The offer was low but really not unreasonable considering the market.  The home seller could have accepted the offer and still had money in her pocket at the settlement table.  It could have been a win-win.

But…she didn’t wanna give it away.  So we prepared a counter-offer which was very nearly her original list price and financial terms.  She gave a little but not that much.  Her message was loud and clear: “I want to sell the house on my terms!”

The potential home buyer decided that there were more houses where hers came from and walked away from the transaction.  Several months passes before another offer came in from marginally financially qualified home buyer. Marginally.  The offer was for $30,000 less than the offer she had turned down several months earlier. However, by this time, she really wanted to sell the  house and move on.  She took the offer.

It was a bit of a struggle but the transaction made it to settlement.  She was able to sell her  house and because she had enough equity in her house, she came out OK.  She could have come out a lot better and a lot earlier.

The Many Reasons For Not Taking A Good Offer

When home sellers tell me they don’t wanna give it away they almost always have other reasons.  After all, no one really ever gives away a house.  Here are a few I’ve heard (many times):

• we’ve spent lots of money fixing the place up with [fill in the blank] …new bathrooms, new ht water heater, new kitchen…whatever
• we really need a certain amount of money to buy our next home … or whatever else they need the money for
• we didn’t get closing help when we bought the house so we’re not giving it
• we have the largest yard in the neighborhood or there’s a pool right down the street or it’s close to the METRO
• more

The fact of the matter is that nothing really matters except what the market is willing to say your house is worth at any given point in time.  The market doesn’t care about how much home improvement you’ve made or how much money you need to move.  The market cares about supply and demand.  The market cares about current pricing of comparable homes in your neighborhood including all those short sales and foreclosures.

It’s a bitter pill to swallow.