If you have been out looking at homes for sale since the first of the year, you will clearly see that sellers are NOT all on the same page.

I deal primarily in property North and East of Downtown Seattle, so I do not speak for Tacoma, Renton, Auburn, Federal Way, Kent or South Seattle.  The lower priced single family homes I am seeing are in Kenmore, Bothell parts of Kirkland, Lake Forest Park , Shoreline and the lower part of Snohomish County.

I am seeing two groups of “seller thinking”:

1)  The first group of sellers are over-priced with meticulously maintained, clean, “updated” and sometimes staged homes. 

2) The second group of sellers have more realistic asking prices, but they are not even bothering to clean up the dishes in the sink for a showing.

Many of the sellers who are bothering to  clean and stage their homes, are also asking more for their homes than they should be in today’s market. By the time a seller gets to the price where they feel they are “giving the home away”, they don’t want to put any effort into its condition.  They are thinking that at THIS ridiculously low price (in their opinion) the buyer should “suck up” much, but that is NOT the case. 

It’s a buyer’s market, and buyers want it ALL.  They want a good price, a home they can move into without much work, AND they want a cleaner inspection at the end of the day than they expected in the higher priced hot market.

“Fair Market Value is the price at which neither party is exceedingly happy.”

There is always a lot of crying and whining in a Buyer’s Market. Sellers aren’t happy at the prices they are getting.  Buyers are walking away from the home inspection because there is a squeak in the floor, or because the bathtub needs some caulk.

Sellers, remember that people who are choosing to buy right now are very afraid of the future.  Pulling the trigger on a purchase is terrifying, even if they are getting “a screaming deal”.  The reality is that you have to do ALL the things you would be doing to get a great price.  Forking out money for professional staging may not be in the picture for many sellers, but do the best you can with what you have to work with.

1) Dirty homes with pet odors sell for less, always.  It doesn’t matter that you “reduced your price by 20% from peak”.  A dirty, smelly house is going to sell for less…in any market.

2) Stacking all of your belongings into the garage, because you don’t want to pay for storage in this economy, is not the way to go.  See if your friends can each take a portion of the items you want to store.  Better yet, get rid of things you know you won’t be moving with you when your home does sell. Not being able to go into the garage because it is filled to the brim with crap, is not going to help your home sell.

3) Thinking you are NOT going to address ANY items that come up in the home inspection, because you were pinned to the mat on sale price, makes NO sense.  Just because you accepted a lower price than you wanted, does not make the inspection phase any different. You can scream “AS-IS” all day long…that won’t keep a buyer in escrow if the home inspection reveals items that need to be addressed. Staying in escrow is just as important as getting into escrow. Refusing  to address minor repair items could cost you dearly in the long run, when you later sell your home for even less.

You have to work at least as hard, and sometimes even harder, in a difficult economy.  This is true of both workers generally, and sellers of homes. Getting less doesn’t cut you any slack in terms of the effort you must expend.

FHA – Whether you are an owner deciding whether to sell or refinance, or a buyer in today’s real estate market, talk with a lender about “assumable” provisions of the mortgage.

While no one can see into the future, we can see into the past.  I don’t think anyone will be surprised that we may be looking back on today, from some year in the future, at dramatically lower interest rates. Most are expecting interest rates to be 7% or more, a few years from now.  Most are expecting home prices to stay down and flat for some years to come.  That means the cost of selling will be hard to recoup, and finding a buyer for the home you are trying to sell will not improve greatly from where we are today.

IF the buyer of your home 3 or more years from now, can assume your lower interest rate mortgage of today, that will be a selling feature.  It happened before in the last recession, and it will happen again.  The buyer will still have to qualify.  The buyer will have to come up with the difference between the sale price and the loan they are assuming from you that has a lower interest rate (so don’t go overboard with downpayment on an FHA loan).

To the best of my knowledge, most if not all, conventional loans are NOT assumable.  Most, if not all, FHA and VA loans ARE assumable.  I’m sure Rhonda will chime in here and give us the scoop on that.

This weekend I was speaking with a young man who may be eligible to refinance his home and stay in it, though he is worried about possibly losing his job and having to sell in the next couple of years.  I told him to try converting to an FHA loan when he does his refinance, keep the LTV as low as possible, and make sure there is an assumable feature.

I am a real estate agent, and not a lender.  All I know is that if he tries to sell two years from now and interest rates are 7%, and he has an assumable mortgage at 5.5% or below, that could be of great help in a future market with more sellers than buyers.

Speak with an attorney about the potential downside of a “purchase money loan” vs. a refinance, in the event of future default, before refinancing an original purchase mortgage. More on that in one of my other posts of the day.