Well, yup, kinda, but kinda not, too.

Yes, now that the housing stimulus is over, if you want to sell your home, you will have to drop your price. Supply and Demand says so and Supply and Demand don’t lie.

Yet if you are selling in order to buy another home, and like many, your next home is priced higher than the one you are listing, then now is the best time for you to drop your price and buy up.

The numbers have never looked so good.  Here are a few things to think about:

Ignore what you paid for your home. This is an irrelevant number – the market is the market.  You need to let go of your emotional attachment to the price you paid for your home.

How do I make cash flow work? This is the tricky part and usually requires the help of a qualified mortgage advisor.  There are ways to get out of a home for a little less than you owe and be able to get into your next home with little or no money down.  We just have to be a little creative.  The benefits often outweigh the costs – it’s worth a look.

I may sound like a broken record on this one, but talk to your lender and your Realtor about renting out your old home, making a move and purchasing without selling your existing home. This makes sense especially if you stand to take little or no cash from the sale in this market anyway. Homes in almost any neighborhood have a market for renters.  One of my clients has rented his 3500 square foot Okemos, MI home out for over $3000 per month for the past 12 months.  Another few years and we both expect he can sell the home (maybe to the current tenant) for as much or more than he owes.  Let the up market do the work.

Get out of debt. This may sound misplaced, but in most situations when I talk to clients who already own a home and want to know how to make the most of this opportunity market, I tell them the same thing: Make a plan to pay off all consumer debt and keep it paid off.  Your ability to make a wise transition in this market is almost zero if you have consumer debt.  Debt will kill you. Get rid of it this year while rates are still low. Make a decision to pay it off once and for all.

Two long time clients of mine recently called me to prepare to make offers on homes near their neighborhoods.  Both want to hold the home as an investment and both homes were listed in the $30,000 range.

First we worked out financing in both situations ahead of the offer.  One of them had enough equity in their home for a Home Equity Line of Credit with their Credit Union.  The other had some cash and a paid off vehicle – a car loan made  up the difference.

Second I suggested that they perform their inspection prior to writing the offer.  One of them dewinterized the home and performed a full blown inspection and the other, being a contractor, simply walked through the cold house himself.

The third step was to make an offer – Cash, no inspection, close in 10 days.  A very strong offer.  One is planning to offer $15,000, the other is likely to offer around $25,000.  After around $15,000 in repairs, the home is ready for occupancy.  Check back later this week for a post about the two different offer strategies being employed here.  They require very different follow up by the buyer.

My advice to them is to be prepared to own the home for more than five years.  Forget about selling it for a while.  A few things will happen during that time.

1.  Bank owned homes should decline to normal levels by then.  This will have a positive effect on house values across the board.

2.  The investor will have paid down some of the moneys borrowed using the tenants rent payments.  This will add to total profits in the end.

3.  Tenants might become buyers in time.  Coaching a tenant to improve credit while renting to them is good for them and possibly creates a buyer for the investor.

When you think about buying a home as an investment in this market – get creative financially.  And don’t think about putting it back on the market for a while.

Why NOW is a great time to buy…

1. It’s a Buyer’s Market.

And it has been for some time. With fewer dollars chasing more houses, inventories remain high, prices low, and sellers motivated. Timing the bottom of the market is next to impossible, and even if you hit the precise bottom, there’s always the interest rate to consider. So while you’re waiting for the market to hit bottom, rates may be up and wiping out your gains. But if you’re keeping an eye on both prices and rates, you’ll see that right now just about everything favors the buyer.

2. Mortgage Rates are at Historic Lows.

Buying a house has never been more affordable, but it’s not just prices that are low—mortgage rates (the cost of borrowing all that money) are also at a decades-long low. Keep in mind that low rates don’t necessarily mean easy credit. Lenders are wary—looking for good credit scores, hefty down-payments, and established income before they’ll extend credit. But if you qualify, the terms are excellent.

3. Builders are Motivated Sellers.

Like the rest of us, builders are in survival mode, and survival means protecting the essentials—credit, brand, and reputation. So home builders are offering steep discounts in order to unload their inventories. This is an opportunity for the buyer to be aggressive. A low-ball offer is more likely to be accepted when the seller is more motivated by the desire to stay in business than by profit.

4. Federal Tax Credits Have Been Extended.

Both first-time and repeat buyers today have considerable tax-credit opportunities—until the end of 2010, at least (there is a phase-out provision, so check the dates). The first-time home buyer credit of $8,000, originally slated to end November 30 of 2009, has been extended, and a new credit of $6500 is now available to repeat-buyers who have lived in their current home for 5 consecutive years out of the last 8. Designed to jump start the market, these incentives won’t be around forever. So that low-priced home you’re considering is now on sale, and for a limited time only.

5. The Cost of Renting is NOT Dropping.

While house prices are dropping, rent prices have remained fairly stable. We’ve seen the uncertainty in what has always been perceived as a solid investment—home equity. But all investments require uncertainty (it’s called risk, and it’s what allows for a return). The renter, choosing zero risk, is also choosing zero return. Today’s historically low prices and rates allow the renter to move into more house than ever before, and begin to build equity while doing it. There’s simply never been a better time to move from renter to home owner.

So if home ownership is a part of your plans, it may make sense to take action now. After all, it may be a long time before we see all of these elements align like this again.