Franzetti Real Estate

The combination of low prices, cheap mortgages, and a slowly improving job market should gradually entice buyers back to the market, setting the stage for prices to stabilize.

Wildcards: Foreclosures. If the investigations into robo-signed seizure documents and other issues turn up more problems for banks, foreclosures could be halted indefinitely. That would prop up prices in the short run but weigh them down over the long run.

Jobs. Housing demand could rise if the labor market picks up faster than expected. In that case, prices would firm up earlier in the year.

What to Watch: Signs of an improving market: three straight months of rising sales and a decreasing inventory of homes (a six-month supply is considered healthy; today it’s 11 months). A local agent or realtor’s association can supply you with that data.

Action Plan: Buyers. Don’t try to time the market perfectly. Even if prices fall a bit more in your area, mortgage rates could rise later in the year, offsetting the drop. Initially bid about 10% below what comparable homes have sold for over the past three months; go even lower if the area is rife with foreclosures.

By contrast, if well-priced houses in your desired area are receiving multiple offers — your agent will know — bid close to list price. But don’t engage in a bidding war, says Mark Foreman, senior vice president at Century 21. Plenty more homes will be coming onto the market.

Until your house keys are in hand, don’t change your financial profile don’t buy a car, take a new job, or pay a loan late. Increasingly lenders are re-pulling credit reports and reconfirming jobs just before closing, says Jim Gillespie, president of Coldwell Banker. Any changes could kill the deal.

Action Plan: Sellers. Hang on a few more years until the market recovers. Can’t hold off? Then try to unload fast.

Prices will be falling in most areas for the next several months and, depending on your location, the foreclosure slowdown in place may temporarily reduce your competition.

Wherever you are, pricing your home right is key. Buyers typically put an upper limit on their search in increments of $25,000 or $50,000. If your house is priced at $365,000, shoppers who cut their search at $350,000 may never see your home.

Best idea: Slightly underprice your house. More often than not you’ll attract numerous buyers who bid up the price, and you’ll end up getting fair value in much less time.

Action Plan: Investors. Assuming foreclosures have slowed where you are, hold off until a few months after they ramp up again. Until then, inventory will be limited, and that will set a floor under prices. When you’re ready to make your move, paying in cash will better the odds of a winning bid, says Foreman.

Action Plan: Owners. One word: refinance — even if you just did it a few years ago.

If you can shave at least one point off your rate and plan to stay in your home for at least four years, a refi makes sense. On a two-year-old $300,000 loan at 6.5%, refinancing will save you $465 a month and $120,000 in interest.

Or go with a 15-year loan, which averages 3.7%. Your payment will jump $225, but you’ll own your home 13 years earlier and save $253,000 in interest.

For a personal consultation, contact Franzetti Real Estate.