Real estate sales hit and all time high in 2005, everything was favorable for sellers: High prices at closings, high percentages paid in relation to the asking prices, and a large volume of transactions defined an extreme seller's market. But that all ended during the first quarter of 2006; There was a rise in mortgage rates, tax assessment reevaluations were put into effect for many areas that spring, and continued reports of a slowing economy and a "bottoming-out" of real estate sales in the media all contributed to a market softening.  

Then the lackluster years of 2007 and 2008 brought a bit more doom and gloom to the Residential sector of the economy, a good amount of sales occurred in 2007,yet with larger differences between asking and selling prices. Some market segment prices dropped, like in the Condo market, and in cities, but sought after towns and transient communities maintained values fairly valiantly.  Unfortunately, the higher number of sales eventually became a direct result of foreclosures, pre-foreclosures and short sales.  It seems easy money was a bit too easy to come by for people that should not have actually been granted mortgages.  Basically, lenders and mortgage originators were letting too many people without sound financial foundations take-out high risk loans on a wing and a prayer that they would do better, and become fiscally fit.  Well, astounding numbers of those loans defaulted and snowballed into what we now-call the Sub-Prime Market Crash.  With a vulnerable economy in a volatile international atmosphere, the market and pricing slide continued. 

Well now, the first quarter of 2009 is beginning with a glimmer of hope and the promise and “dawn of a new day-“  A new president promising to help the foreclosure notice recipients and put a stop to new foreclosures, a complete cut to the prime rate of interest which has reduced mortgage interest rates to unbelievably low rates hovering around 5%, nearly free money!  And not to mention the ability for Buyers to cherry-pick their favorite house and best deal possible with the smorgasbord of Short Sale listings from which to choose! Nice homes in great areas and in great condition are also being sold at Short-Sale “Lender or Third-Party Approval!”

So, as the high inventory gets higher, we wonder, but wait, where are the Buyers? Well, few Buyers are ready to spend their hard-earned cash, making for a very painful beginning of the New Year, even with the low rates.  Other obvious contributing factors include: Conservative lending practices, a high rate of unemployment, stock market lows cutting our investments in half at times, and homes that are not selling.  This is all contributing to the recession and uneasy financial atmosphere, making Buyers not really feel like true Buyers, but more like look-seers, and hopers. 

But, this too shall pass…All markets ebb and flow, rise and fall, drop and recover.  Unfortunately, our recovery is not right around the bend, but everyone in control is doing what they can to keep the casualties to a minimum, a GREAT thing!

Advice to Sellers

Sellers That Must Sell: Be prepared to discount with the right Buyer. You are competing with Short Sales and Foreclosures, and even relocation Buy-out Properties.  Your market may appear skewed very low to the Buyers and appraisers that are paying attention.  Make sure your Real Estate Agent brings you all offers even after you may have an Agreement, as lenders are finicky and not making it easy to secure loans. Yes, denial letters are being issued.  Thus, back-up offers may make the sale. And if your house is not selling, take a stagers advice on inexpensive changes, like color scheme, furniture layout, and décor style. 

Also, remember that advertising closing cost credits and credits toward updates, may hook a Buyer to consider your home first before another home.  Offer inexpensive updates that can be done easily once they receive a commitment letter.  Home warranties on appliances and mechanics are another inexpensive way to comfort Buyers about homes that are a bit older.

Another low market remedy -rent to credit-worthy relocators when you can.  Do your homework with a potential tenant, but consider this to ride out the low market

Lastly, take a credit-worthy Buyer’s offer when you can afford it.  Negotiate when you can, but, take the offer that is doable for you, even if it seems too low.  Otherwise, you may not see another come along even that high, as time marches on.

Sellers that are Considering Selling, but Don’t Need to Sell: Wait it out and Don’t List - If you are a homeowner with less than 20% equity in your mid price-range home, are considering a larger home, but do not truly need to sell, consider the pro’s of riding out this low–price Buyer’s market if you do not have a Buyer already willing to purchase your home.  Yes, you can purchase low, but you may not be able to sell your house in the first place if you cannot compete with the extremely discounted prices of your competition.  In the meantime take any discretionary extra income you have and fix the nagging problems you encounter at home, invest in the systems and structure like new heating system, new boiler, windows, roof, etc, over the next year and a half, at least, and improve your investment if you can afford to.  This will position your home better once you are ready and you see a fighting chance to enter the market with less competition. If you wait 18 months or two years you will probably sell higher than the present will offer.

Check with your local credit union or direct lender for low interest refinance programs that will take a qualifying home and homeowner with good credit and give you a lower monthly payment with little money down and few hassles…this will reduce your out-of-pocket expenses and ease your burden if times seem tight. Especially, if you cannot afford the credit-risk of a Short-Sale and can make ends meet while you wait for the market to turn.

Gauging the Market for your Home:  Contact us at info@NEProperties.com to obtain ongoing Solds in your area in the price range you would like to, or need to be in.  We handle all of Rhode Island and southeastern Massachusetts.