Seller Considerations – Sell During the Lull in Foreclosures

The strategy that has been used by many homeowner’s thinking about waiting to sell their homes until the market improves hasn’t worked for the last 5 years and probably won’t work now.  Many homeowners considering selling their homes have found recent economic improvements and increasing sales activity to be very reassuring. They reason that after years of seeing price declines, a real estate recovery is finally underway.

Not so fast! We may just be experiencing a temporary lull in further price declines. According to Jan Hatzius, Chief Economist at Goldman Sachs, home prices are likely to fall another 6.7% through the first part of 2013.   Hatzius points out that “A temporary lull in foreclosure liquidations by banks has given the illusion of a bottom, but a foreclosure inventory overhang that is fairly widespread still remains.”

For homeowners that are considering selling their home, it may be smart to sell now as opposed to waiting until later. Consider how the tremendous backlog of as many as 8 million foreclosures and distressed property sales could impact prices over the next 24-36 months.

Sellers should also consider the possibility of a double hit as it is very likely that once a recovery is under way and the excess housing inventory absorbed, interest rates and inflation are likely to become the next major issues.