In his blog, Real Estate Undressed, Larry Cragun says falling home prices are the fault of real estate agents who list short sale properties.  A couple of quotes from the post:

• "I think agents that list short sales are the cause of home prices continuing down. I believe it is caused by a lack of fiduciary responsibility in short sales."
• "Where is the agency in a short sale if the agent has the property listed for sale? Sellers get nothing out of a higher price? No benefit there? There is no need for the seller to expect a quick sale, or benefit by one."

A basic understanding of human nature would tell us that the sellers wouldn't be listing their homes with a short sale as a probability if they didn't expect to get something out of it.  Depending on the state, getting a higher price can definitely be a goal, as the deficiency judgment will be lower.  Also, income taxes can be levied against forgiven debt in many cases, so less difference between mortgage balance and sale price is a good result.  Definitely there's something to be gained by speeding the process and getting on with their lives free of a home they may have been trying to sell for months and are in danger of losing in foreclosure.  There could be several other reasons.

The post makes it sound like the real estate agents are able to unilaterally list the properties without owner consent.  Obviously the owners see some upside of a short sale, so let's not put this huge guilt trip on the agents trying to get the job done.  I, for one, wouldn't want the hassle of trying to make a short sale happen with the current attitude of the banks, so congratulations to those who are getting it done for sellers.

More see walking on mortgage as a viable plan - Business - Real estate - msnbc.com.  There's no good news in this article, but it is an interesting read about a real situation of strategic default.

Over at Today on MSN.com, Barbara Corcoran tells homeowners how to sell their home.  While there are a few good tips in the article, some of the comments showed that even some of her readers disagreed with the painting tip.  But that's small potatoes compared to other advice.  There were 9 tips.  If you take to heart tip #2, forget the rest of them, and get ready to take a bath.  The title of tip #2 is "Price it at exactly what it's worth."  However, Barbara advises you to list at 10%-15% below the comparable listings in the market.  If everything is overpriced by that amount, then I guess it would be "what it's worth."  If everything isn't overpriced in the market, then it's not priced at what it's worth, it's under-priced.  It will sell before the comps, everything else being equal, and usually without staging and the other improvement tips.  If you're in one of the worst markets, under-pricing and other incentives are probably necessary.

However, the "Don't build wiggle room into the asking price" advice ignores the current buyer sentiment.  Buyers know they have the upper hand in today's markets, and if you ask how many expect to pay "list price" for a home .... well you'll get some laughs.  Even if they perceive that it's value-priced, and it's 15% under the market, they'll likely believe that the seller is more motivated than is actually the case.  Here comes the low-ball offer.  Actually, I agree with Barbara in some ways.  If you really need or want to sell, price below the market.  Just don't expect to get the asking price, as the buyer will want to cut an even better deal.   You'll get it sold, but below your "no wiggle room price."

It's Barbara's tip #6 that shows where her loyalties lie.  She's an empire-building broker, and speaks around the country on branding and building a huge business.  Her tip #6 is titled "Use the best broker."  The tip however, says to hire a broker in the top 10%; "they generate 90% of the sales."  While the numbers may be somewhere close to the mark in many areas, since when did quantity equate to quality?  First, it shows more that they know how to market themselves than it does about how well they do for their listing clients.  Of course, if they're getting to the top by getting their sellers to put their homes on the market for 15% below the comps, then selling more homes would be a slam-dunk.  I know from my own market that there are top 10% brokers who do a lousy job of marketing homes for their sellers, and there are small shops that are in the middle of the pack and do a superior job.  So, while Barbara built a gigantic brand and company in New York, and she obviously wants to promote those who market themselves well, it doesn't mean that they are the "best broker" for the readers of her article.

Oh, and the first tip about taking a home off the market till late January then re-listing it as "new" indicates that she's a bit behind the times.  Many MLS systems now maintain a "cumulative" days on market field as well as a "current" field.  This tactic doesn't work.  My MLS requires that a home be off the market for six months to get a "new" MLS number that resets days on market to zero.   The seller should talk to their real estate professional about their market and MLS rules before electing this strategy.

This time of year it's easy to find articles and blog posts all over the Internet about taking a home off the market during the holidays.  It's true that sales slow down during this period.  In my vacation home market sellers will take homes off the MLS just because they're using them during the holidays and they don't want to be bothered with showings.

However, it's interesting how many of these articles also mention the "setting days on market back to zero" tactic.  While many MLSs have instituted current and cumulative DOM so their members can see when a home has been pulled and how many total days it's been on the market, not all have.  In reading these posts, they're split between advice to take the home off the market and get the DOM to reset to zero, and on the other side, it's considered unethical to try to fool buyers and their agents.

The arguments center around the assumption that the longer a home stays on the market the lower the price that the buyer can offer.  It may be a self-fulfilling prophecy, in that it's only one side of the equation that is usually prone to act on this assumption ... buyers.  It doesn't necessarily mean that sellers will settle for less.  In one of these articles, there was also advice for the seller to make sure that they don't leave bargaining room in their price, as it's a tough market right now and a home must be priced right to have a shot at an offer.  Perhaps these two strategies go together, but there may be entirely too much discussion around the topic.  There are many motivational influences in a home price negotiation, and days on market is just one of them.