Ramesh Nyberg's Real Estate Blog

When people ask me about the "bad" market,  I tell them I don't work in it. I do have a choice-- I don't take overpriced listings, at least I try not to. At times it happens, when you find out AFTER the fact that the sellers are not as willing as you thought to reduce. I also cannot afford to work with a buyer who isn't willing to provide a pre-approval letter at least within the first week of meeting them. It's simply not cost effective, particularly in this market.
Does that sound cold? Its really not, when you consider that I don't get paid by the hour, or by salary. I, and all the other Realtors I know, get paid ONLY if there is a closing. And so, if you spend a lot of time doing things that don't lead to closings, you get, errr.. poor.

I mention this because the market is currently flooded with people who need to sell their short sales, and yet are STILL reluctant to move prices down when there is no activity. And there are buyers who are confident about their "credit" and that they will have "no problem" qualifying, so they don't want to provide a pre-approval letter until they've identified a property they like.

Let me address the sellers first: Before listing to sell on a short sale, you should definitely consult your accountant. If you are selling your primary residence, the law currently protects you from getting taxed on the difference between what you owe and what you sell for. This used to be called the "deficiency tax," and Uncle Sam has decided you are absolved of it through 2009. SO WE ARE TOLD. Also, know that this concession DOES NOT apply to investment properties, only primary residences.

Now, the buyers: Get pre-approved, is what I urge everyone to do, for two main reasons. 1) You can shop with confidence within the price range your lender gives you, 2) you'll have it ready when you find the house that knocks your socks off, rather than having to apply. Many sellers, because of the tightening of credit criteria, want to see the pre-approval letter before they sign a contract with you.

Pre-approval letters are good for 3 months. After that, re-apply.

So, with smarter, more prepared sellers, and smarter, more prepared buyers, we can create a new market. One that moves faster, and more efficiently, has less transactions "fall through", has more on-time closings, and starts to fuel the housing statistics with upward movement.