et’s start with the good news – homes are still selling – just not at the pace they were just a few months ago. Much has changed since the start of the sub-prime and liquidity crisis. It disrupted financial markets, made obtaining jumbo loans more difficult and, most importantly, changed the confidence factor among potential buyers.

The economy is not out of the woods, but there are many positive signs with the nice rebound of the stock market due to the Fed lowering their rate, inflation appears to be under check, we are still experiencing job growth (although minimal), interest rates have leveled off and have even come down a bit, and it appears that the sub-prime fiasco can be managed. In spite of these encouraging trends the housing market has entered a period of stalemate – buyers are in a state of ennui believing prices will drop further and sellers thinking they still can get the price their neighbor received six months ago.

Many buyers are now on hold until they feel comfortable that prices have stabilized. With front page headlines shouting that prices will still come down, who wouldn’t want to wait? However, what the headlines don’t say is that there are still a number of markets where sales prices have not dropped such as San Francisco, Marin, San Mateo and Santa Clara counties. The current course-correcting market is quite different from previous markets as interest rates are still low and the upper tiers of most markets are still selling.

So what does this mean for buyers and sellers?

For sellers if you don’t have a good reason to sell---don’t. This is no time to test the market. Why waste your time. Buyers know values and in the vast majority of areas there is not a feeding frenzy for homes.

For potential sellers in the specific areas with low inventories and high buyer demand, this could be a real opportunity before the market takes off again and more sellers come on the market. The examples are marketplaces with inventories below three months. It is still a sellers’ market in these areas and we still have overbidding.

If you are a seller who must sell in this market and are in a market of abundant inventory, you must do everything you can to present your home in a way that outshines your competition; you must also price aggressively. This will maximize your return. Most importantly, this will give you the best chance of selling your home. The key for sellers is to be competitively priced no matter where your home is located. Buyers need motivation. Overpriced homes are ignored. Sellers need to be prepared to negotiate. In most cases, if a buyer is willing to write an offer, they are serious about trying to buy your home. It may be trying during this period of negotiations, but the key is to keep the dialogue going. Many times if you continue to work on an agreement the likelihood of a sale increases.

For buyers who are waiting for prices to drop, you may be waiting a long time unless you are interested in areas with large inventories and can find the few desperate sellers. Many sellers will just take their properties off the market before giving them away. Appreciation has slowed to the low single digit. With decreasing numbers of multiple offers, buyers have an opportunity that has not been present for many years – they can negotiate. Better to be a buyer in a market where others are not readily buying, than to be in a market where many buyers are outbidding each other like we saw in 2004-05. That combined with low interest rates can make this current market a boon for savvy buyers.

If you are a buyer trying to find a house in the most desirable neighborhoods with little inventory, be prepared to find yourself in a sellers’ market. You will have to present your best offer, suspend disbelief, just because the headlines say it is a slow market, a few areas around the bay are still back in 2005. If you want the home, you will have to do what it takes to win.

Yes, the market has slowed, but it has not stopped. There are still opportunities for both buyers and sellers.