I'm wondering if one of the results of the recent subprime issues will be an increase in offers by sellers to carry financing for would-be buyers?

While there was a time when owner financing was very common, we haven't seen much of it at all, even during the last year as sales fell. But then, interest rates are still historically low and as I've said, if you had a pulse you could probably get a mortgage!

But with that changing, I wonder if sellers will step up to fill the void? Clearly it's a risky market. How desperate are sellers or how desperate will they get?

What do you think?

Once again yesterday the melt down in the subprime market made the news. With the stock market down over 200 points, at least in part because of the problems in the subprime market, it's definitely the talk of Wall Street. And it's also getting lots of attention in the real estate community.

If you're not familiar with the background on this let me fill in a little bit of the picture. During the real estate boom of the last few years it seemed like just about anyone could get a mortgage. Now some of these weren't the kind of mortgages anyone in their right mind would have signed up for. But desperate people do desperate things! Many of them were adjustable rate mortgages. Some of them adjusted gradually. Some of them ballooned suddenly after a year or two. If you borrowed 100% of the purchase price of the house and were barely scraping by and now you're payments are suddenly increasing substantially, you may have a problem.

Nationwide, there is clearly a growing number of foreclosures. Despite the stock market performance yesterday, this is nowhere near a panic situation right now. In Virginia for example, in the 4th quarter of 2006, 3.7% of all mortgage loans were in delinquent status. While that's a higher percentage than we've seen in a very long time, the sky is not falling.

Here's what I will be watching and worrying about in our local market. If the number of foreclosures increases dramatically, that will mean lots of additional inventory for sale. In a market that's already drowning in excess inventory, that would definitely be a bad thing.

The other piece of this is that this situation has forced lenders to tighten up the requirements on borrowers. Many lower end borrowers may find themselves unable to qualify to buy a home now. Let me just say, that this is a good thing from a big picture perspective. Many of these people should never have been in a position to buy a home and to do so would subject them, eventually, to terrible financial pressures. But the subprime borrowers were a big enough part of the market that their absence will definitely be felt in the form of lower demand.

These two factors together could mean a rougher 2007 than most economists and housing industry experts had predicted until now. This is a story to keep an eye on!

I know sellers are waiting anxiously for how February numbers look.  And while it's too early to have all the data, here are two quick items to make you feel a little better!

Overall inventory fell this month from 1903 to 1793. These numbers cover Fauquier, Culpeper, Madison, Orange and Rappahannock counties. I can't tell you yet how much of this is attributable to new contracts and how much is attributable to the wintery weather that plagued us for much of the month.

There's also good news on the interest rate front with rates falling again this week for the second week in a row! That's good news for buyers and sellers!

Stay tuned to this space for more data as it becomes available!

There's lots of talk out there about what's happening in the housing market.  But let's look at some hard numbers for some of the local jurisdictions.

As you can see, Fauquier County has been hit substantially harder than surrounding areas. I don't have Culpeper numbers right now, but I would speculate that they are worse than Culpeper. John McClain, senior fellow at the center for Regional Analysis, George Mason University says we've taken the brunt of this because of the large percentage of new construction on the market here. When existing homes are competing against that much new construction and the upgrades being offered for free often add up to $50K or more, existing homes lose!

The good news is that some of that inventory is starting to be absorbed. With numbers this low, I believe we will not see substantial continued decreases in prices, at least in the outlying counties.  But don't hold your breath for a quick rebound either! There are still a lot of empty new homes out there!

I can't explain it. And I'm not certain yet that it's more than a blip. But there's been a definite pick up in buyer activity over the last couple weeks.  It was especially notable this weekend, but it's been going on for awhile.

I've had more showings of my listings in the last week than in the previous three months. I received one offer on a listing and a call saying another one may be in the works. I wrote one offer this weekend and have several other buyers who will likely write in the next couple of weeks.

There are many reasons that could be behind this. Or it could be nothing at else. But I believe psychology usually drives the market more than any hard, cold economic facts. And, it may be that there's been a subtle shift in the psychology out there in the last couple of weeks.

If you're an agent, are you seeing any signs of this? If you're a buyer, have there been any changes in your thinking recently? And, if you're a seller, are you seeing increased showings of your home?

I'd love to know what you're all seeing and hearing!

I've turned down a couple of listings in the last two weeks. Understand that no real estate agent wants to turn down a listing and the potential for a commission! It's never something I do lightly.

But there are still sellers out there who are reluctant to accept current market conditions.  And, I understand where they're coming from.  I've heard "I need to get more money than that so I can buy what I want." The sad answer is that buyers could care less what you want. When you go shopping for your next home, you won't care a fig about the sellers predicament except insofar as that improves your negotating position. It's true for the potential buyers of your home as well.

A couple of sellers have properties that they bought as investments at the tail end of the red hot market. They tell me they will actually lose money now if they sell at the price I tell them they can get. And, again, they're right. And, again, buyers just don't care. I had to tell one seller today that I believe it will be several years before they're able to sell their property for a high enough price that they'll have a gain on the sale.

I've also had a seller whose home needed significant cosmetic improvement. They told me that they had no money with which to make those improvements. Again, I understand a cash crunch!  I've had plenty of them myself. But the truth is that what is selling right now are homes in excellent condition that are priced very aggressively. If you're not going to do what's necessary to make your home shine and you're also completely unwilling to lower the price to what the market will bear, there's really no way for me to help you.

And, I want to help you! I'm working with plenty of sellers where we're partners at beating a tough market. Even on the worst days I still feel good about how we're pursuing their goals.

Another agent this week said she's very frustrated that she's lost several listings this year to agents who promised the sellers a much higher sales price than they could possibly obtain. And that's tough! You know that the home will sell for that. In fact, I had one seller tell me they suspected they were being bamboozled. But hope springs eternal! I understand how hard it is to go with who you feel is the best agent when there's someone else who is absolutely sure they can get you more money! I'd just say, be wary. You know what they say about if it sounds too good to be true! There are plenty of agents who will tell you what you want to hear and are banking on getting you to lower the price to a more reasonable number down the road.

The latest numbers show that inventory is no longer decreasing locally. That means prices will continue to fall. But that's the subject of my next blog entry! So for now, just keep in mind that it's a tough market out there and you need to price your home aggressively and make sure it's in top condition!

For more tips for sellers, see my web site at http://www.JulieEmery.com

There are a lot of real estate agents and real estate companies working to convince buyers that it's a good time to buy.  And the thing is, I absolutely believe they're right!  But it's easy to say when it's not your money on the line, right?!

So, I'm going to put some skin in the game, so to speak!

Here is my guarantee to you, the buyer.

If you purchase your house with me as your agent, own the house for at least three years, and sell the home with me as your agent...

if you do not net at least the original purchase price of the house and the broker commission, I will work for free to sell your home!

The only caveats are that the house must be in substantially the same or better condition as when you bought it.  (i.e., if it burns down I'm not working for free to sell your pile of ashes!) And, I must still be a licensed REALTOR in the state of Virginia.  If I retire 20 years from now and move out of state I won't be moving back and getting my license just for you! (Although I'll be happy to help you find the right agent!)

It is a good time to buy!  And I'm putting my money where my mouth is! Call me and let's talk about helping you find that next house!