Five years ago home owners were in the middle of selling their houses right at top of the real estate bubble. Homes were selling at a premium, and some homes were even getting multiple offers causing a bidding war. Executive Director of Research Keith Gilabert, says “I remember thinking the market would continue to go up, and it was better to buy now because every time I checked the MLS listings prices were jumping 10-15% every other month. Looking back, I wish I would have sold and been patient, but at the time it seemed like the right thing to do. The problem I had was that I sold my house for $585,000.00 in 2005 which I bought for $215,000.00 just five years earlier, nice profit…right?? Well I also ended up buying a new house for more than it was worth.” Eventually that million dollar purchase tanked 35% and it is still dropping adds, Gilabert.

Now that the market has been dropping for a while and the market has become a buyers market. Because of the loose lending practices that happened a five years ago, a lot of homeowners are finding themselves underwater in their mortgages, they owe more than the house is now worth.

The number of U.S. homes worth less than their outstanding mortgage jumped in the fourth quarter as prices fell and lenders seized fewer properties from delinquent borrowers, according to Zillow Inc.

Gilabert is very familiar in making deals happen. In 2010 he reported to the Mortgage Association and Underwriters Guild that he expects real estate prices to drop an additional 10% from data collected from Case/Shiller housing reports.

Today Gilabert has reported that we may see real estate continue dropping until mid-2013.

So, how does a homeowner sell in a down market. Gilabert explains, “a savvy home buyer is going to know that you need the money and need out of your home. Chances are you’re going to get hit pretty good selling your home.” Gilabert adds, a strategy he recommends using in a down market is called “Best & Final.” It is when a seller has received multiple offers below asking and then counter offers to all bids with a Best & Final. That means you actually don’t put a price on the counter offer and you let the buyers then decide what is the most they are willing to pay for a home. Gilabert says, “this way you just created a bidding war on your home.”

Using this strategy allows the home seller to retain some control. Gilabert says, “with this strategy you (home seller) are holding all the aces because you get to see what the best price the buyer is willing to pay, instead of trying to guess the best price that will be offered. I’ve seen this process workout extremely well for a seller. He offered his home at $2.5 million and received offers $250,000 below asking. He then went with “Best & Final” strategy and sold his home for more than the original asking.”

One pitfall Gilabert warns against is asking for a dream price. He cautions, be realistic about the market and what you are selling. I understand every person’s home is their castle but in this market there are no castles. If you price your home too high and find yourself with no offers and then reducing your price, well then you have basically created a stigma on your home and will be selling for a steep discount.

Learn more about Keith Gilabert at keithgilabert.com, keithgilabertfoundation.org, keithgilaberttruth.org and keithgilabert.net.