Many homeowners evaluate the market and focus on "my house has depreciated $100,000 in the last year." This is a misleading mindset. The house is only worth what it can be sold for in the present market, and real estate is a commodity that fluctuates.

If you sell in a seller's market you also buy in a seller's market. Sell in a buyer's market, buy in a buyer's market. You trade apples for apples.

If Apple 1 costs $10, Apple 2 costs $10. If Apple 1 depreciates to $1, then Apple 2 is also $1. So you could sell your home for $900,000 last year and you downsized and purchased a $500,000 home. Maybe your house sells for $700,000 this year, but you can downsize to a $300,000 home. What is your net profit?

Every so often you can sell in a seller's market, rent a year or two, then buy in a buyer's market. Usually though, even if you sell and buy within a four- or six-month period, you will have a similar value baseline.

Last year we considered selling our Sunnyvale home. Neighbors were getting $50K or more over their asking price with multiple offers. We decided to wait until summer, thinking the market would improve with a new school year forthcoming. Did we make a mistake and miss the market? Do you think if we wait until summer 2009 that will be a better time to sell?

The real estate market is adjusting to economic factors, and the most difficult decision you may make is whether you wish to adjust your expectations to meet the terms of the economic changes. While you may not receive the plethora of offers that your neighbor got last year, in reality all that is needed is one strong offer from a qualified buyer. The bottom line is buyers are heavily considering price, and if you want to sell you need to be willing to meet the market.

Spring to summer is traditionally the best time to sell as people tend to relocate after the school year ends. Sellers position themselves then to list their houses for this peak season. Statistically, you may have more buyers shopping in the peak season, but usually you'll have more competition as well. Many sellers sign a six-month listing agreement, so the unsold homes that were listed in May or June are coming off the market now. Listing your home prior to the peak season very well may position yourself among fewer competitors.

Let me blog here a bit about panic selling and trying to save money.

My husband, bless his heart, is a very good reasearcher and lets-fix-it planner. When gas was about $3 something per gallon he researched selling his truck (16 MPG) and downsizing to something more economic. After picking out three or four vehicle options that met his needs, we talked about how and when.

Something didn't set right with the concept in my mind. So I put a spreasheet together calculating the purchase price (of various new and used models he selected), cash down, loan amount, monthly payment, average MPG and compared it to his current vehicle.

Part 1: We owe $2400 on the truck at $310/month, and it's close to being paid off. We can't sell it for bluebook value due to the market being flooded with gas-guzzler trucks and SUVs. So we'd be lucky to walk way with $6K cash after it's paid off. Buying a new vehicle is nice, but it would increase our debt, monthly payment and length of payments another 4 years. The only cost-saving solution over time would be to buy a more economical vehicle with cash. Period. And what can you buy that will be under warranty or reasonably reliable for $6K? So we exchange a $310/month payment (that ends in about six months) for unknown vehicle with unknown problems. Not smart.

Part 2: When you calculate out the difference at $4 per gallon for a 16 MPG vehicle being driven 36 miles a day vs. a 24 MPG vehicle ….. you know what the difference is in commuting gas cost over a month? About $60.

Conclusion: To save $60/month we can become indebted for another 4 years of car payments? How does that save money?! Guess what? Three months later problem solved: gas prices drop 20% and my husband is carpooling to work. The carpooling alone is saving us over $90/month even if gas goes back to $4/gallon.

Moral of the story: Take time to compare your options carefully and run the numbers. Following the market trends may not be the best solution for your pocketbook.

…..when is the time, is the market dropping, will the new election create positive motivation….???

I wish I had the real estate crystal ball, but this is a unique market.

Do you need to sell? Retiring, relocating, needing to reduce living space, second home, different schools….what is your motivation factor?

If you can afford your mortgage and the home meets your needs, I'd recommend you stick it out. Food, shelter, and transportation are key life needs. If you can stay where you are and it is financially affable for you to do so, why sell? Real estate is an investment that gains value over time….typically 5 to 10 years. Panic selling your principal residence is ill-advised if you are just trying to circumvent the market.

I was asked:

Dear Steven,
I have a home in Cupertino for sale. So far in the past month I've hosted 3 open houses and have attracted qualified buyers. However, each time, the stock market has dropped the following Monday 500 pts or more. Am I bad luck for the market, or is the market bad luck for me? Should I quit having open houses, as it doesn't seem to be lucky for me or the market?

Should I continue to drop my listing price to chase this crazy real estate market, or hold tight and wait for this horrendous storm to blow over?

Since you've been in the Cupertino RE market for many decades, I'd like to get your analysis of where you think things are headed and how we should best handle our listing.

So how do you sell in a difficult market? The key is making the home attractive to the buyer, and with a fluctuating economy it comes down to price. As much as I hate to be the bearer of bad news, if you need to sell, price the home under the market. The popular attitude is one of cost savings in this housing recession. Those buyers who wanted to buy two to three years ago but couldn't due to peak prices, now are in a better position with cash down, low interest rates, and more affordable prices. They're out there looking for a "good deal."

If you don't need to sell, staying in your current home for a few more years may be your best option if you need to hold out for more equity. I encourage clients to look at the big picture: If you sell in a down market, you can buy in a down market. A $700K house two years ago may be worth 25% less on the market today. But that is generally true across the board, so the community you want to buy in is also less expensive. Value on paper is one consideration, but your overall cash flow and needs should be weighed.