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Home Sellers Remain Nervous About Market

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Oct 4, 2008 5:24 pm US/Mountain

Home Sellers Remain Nervous About Market

Written by CBS4 special projects producer Vicki Hildner, vhildner@cbs.com
Reporting
Karen Leigh
DENVER (CBS4) ― Even with the economic rescue package, Americans remain nervous about the future of the economy. And perhaps no one is more nervous than someone trying to sell a home.

Evelyn McGraw still can laugh as she describes her beautiful home on Lafayette Street.

"It's 110 years old and if I look this good at 110, I'll be very happy," McGraw said.

She has good reason to be proud of her historic home. But with four floors, it's more house than she needs, so she has decided to sell.

In two months, she has had no offers. It's hard to be optimistic with developments on Wall Street hitting home on Lafayette Street. .

"You know, after the last few days, I think everybody is sitting tight," said McGraw, sitting in an easy chair in her bright living room. "They are saying 'let's see what happens,' before they make a huge investment. And I can understand that."

McGraw has put her house in the hands of realtor Sonja Leonard Leonard. But after decades in Denver home sales, Leonard says the nation's economic problems have created problems she has never seen in the real estate market.

Leonard points to the nightmare called a "Dry Closing," where everyone shows up at a closing except the guy with the money.

"You go to (a) closing. You've got your buyer and he's got his loan. You've got your seller and he's packed the truck. And the lender doesn't come to closing," Leonard said. "That's what's called a 'dry closing,' and it's very, very scary."

Leonard also bemoans loose lending practices encouraged by Wall Street, which have now hit home for sellers who owe more than their houses are worth.

"There's no equity in these houses," Leonard said. "The people took out their first. They took out their second as their down payment. Then they took out their third for their car and their fourth for tuition and their fifth to pay their Visa bill. Now, if they want to sell, I tell them they will have to write a big check at closing."

As Wall Street tries to get its house in order, even borrowers with great credit are getting squeezed. Borrowers are being told by their banks that their $500,000 line of credit has been reduced to $260,000.

"Even 'A Plus' buyers are being put through the wringer," Leonard said.

Some sellers are still living in the past, turning down initial lowball offers, assuming better ones will come along. Leonard has started listing her sold homes with the price that the seller initially turned down, followed by the much lower price that the house sold for, months later.

McGraw remains convinced the buyer who loves her house as much as she does will come along. But she can't even begin to predict when.

"It's a scary time," she said. "You don't know what's going to happen."

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