Market still has plenty to offer.

Because home sales are starting to sizzle does not mean the prices are soaring. But the sun is still shining because home sale activity is the first sign of economic recovery. Prices never go up until the market becomes balanced. That is, the number of listings -- and the number of sales -- are consistently similar in a given time frame. But the next step must also occur. The volume of sales must top the number of listings to create a scarcity in the market. Scarcity creates demand and demand increases the market value of the property. More simply, there exists more buyers than sellers.

The reality of this active market is that prices are continuing to drop slightly. Sellers need to be educated that the market continues to have a substantial oversupply. Much of the oversupply are short sales or foreclosed property. Sellers need to be aware of short sales if their property is on the market competing against this type of listing. Short sales take many weeks and sometimes months to close.

Lenders who are working with sellers on short sales need considerable information from both the buyer and the seller. The seller must prove financial hardship, in most cases, to qualify for a lender-approved short sale. The buyer must be qualified and patient.

The seller still has control of the property and may or may not accept a contract presented. In some neighborhoods, there are few short sales or bank-owned properties. The values in these neighborhoods tend to hold and not decrease as in the neighborhoods with an abundance of short sale listings. If one or two homes in a large neighborhood are short sales, this may not decrease the market value of the neighborhood.

As the market stabilizes, the sales become more of an "arms-length" transaction. That is, the sellers are not under duress and values begin to hold. Short sales are usually placed under contract quickly and with multiple offers. There is a lengthy delay in closing due to the lender-required procedures. Buyers who are patient usually close with an excellent value. There are also many excellent values that are not short sales. Buyers are smart by buying now even if the prices dip slightly in the future. The interest rate is so low that it is highly unlikely that these conditions can continue.

If the rates increase, the buyer loses the advantage that he/she has in today's market. It is obvious with this type of sale activity that the selection of the best values in price, location and condition will soon be picked over. The time is right to buy.