More sellers are growing desperate as homebuying stalls locally

The owner of a town house in Factoria put his place on the market a year ago, dropped the price repeatedly and accepted two seemingly solid offers that fell through at the last minute. Less than two weeks from foreclosure, he got a third offer that he hopes will hold up.

A couple living high in the Bellevue hills are by no means desperate, but they've dropped their price by more than $200,000 and still haven't seen an offer they like. For now at least, they're waiting it out, their plans to live closer to all 12 grandkids on hold.

The next chapter already has begun — though not quite to script — for a former Shorewood couple already building a retirement house in Arizona. It'll be done next month, but their view house here, which they were sure would sell by now, has not.

The Seattle-area housing market, once touted as bulletproof against the forces that were pulling down other markets across the country, is now stressing out sellers, who are seeing inventories rise, sales fall and prices drop. Many are shellshocked — particularly those needing to move out of town or trying to forestall foreclosure.

"My advice to sellers is if your house works for you, keep it. But if you need to sell it, then let's sell it and continue to drop the price until we do," said Ryan Thompson, a John L. Scott Real Estate agent.

As recently as last year, buyers were paying above list price and sometimes even waiving home inspections to come out the winner in multiple-offer situations. Now they seem content to wait for ... what exactly? Prices to drop even further? Superior mortgages? Clarification of the Wall Street crisis? The election?

As a result, sellers are accepting terms they might have scoffed at before, such as contingent offers and lease-purchase deals.

Contingent offers, which hinge on buyers selling their own homes, are risky because even the most attractive houses aren't selling, particularly those priced above $750,000, Thompson said.

In lease-purchases, a buyer rents a home for a specified time with a contract to purchase it later on the hope of securing financing. Thompson said he generally advises sellers to reject such deals.

But some feel like they have no choice because they desperately need the rent income to help pay their mortgage.

On brink of foreclosure

The first offer Jason Stanifer got on his Factoria town house was in April — six months after he put it on the market and one month after he stopped paying his mortgage, which started the foreclosure clock ticking.

While waiting for the deal to close, he took the town house off the market for more than a month. But that buyer backed out. In July, he got another offer and took the property off for two months. Again, the deal cratered, this time because of financing — one day before the deal was to close.

"What can you do?" said Stanifer, who is banking on a third offer he got just this week to be his reprieve from foreclosure.

Stanifer bought the three-bedroom home four years ago and took out a second loan on it, investing the money in his mortgage-brokerage business.

As his business dropped off dramatically in summer 2007, he did the math. With one of the loans, an adjustable-rate mortgage, about to increase by $1,000 a month, he realized he no longer could make the monthly payments, which totaled $4,000.

So he put the home on the market in October 2007 for $479,000, confident it would sell. But no offers came. When he received his first late-payment notice in March, "I was on my knees over a trash can" getting sick.

He thought the town house would show better vacant, so he moved his family to a rental in May. By the time the third offer came along, he had dropped the price about $115,000 from the original listing.

Waiting out the market

From their house in the Somerset Hills neighborhood of Bellevue, Victor and Lisa Kepler enjoy a 180-degree view that takes in Mount Baker, the Seattle and Bellevue skylines and Lake Washington.

But the Keplers find it hard to see the future much beyond their living room. Their plans to sell their home and buy a small place in Arizona and a condo in downtown Bellevue are on hold.

"Worst-case scenario: We're stuck living here," says Victor Kepler, a filmmaker.

In the big picture, the Keplers, who bought the house in October 2002, know they are fortunate. Their Bellevue house, built in 1962, is a showcase for its architect, who also designed the Museum of Flight.

But the house has been on the market since May, its current $1.165 million price representing a $200,000 price drop.

Lisa Kepler, who works in the mortgage industry, said the couple realized the housing market was soft when they decided to sell, but Somerset was said to be holding its value.

The Keplers rejected one offer that was too low. They turned down a second offer, doubting the prospective buyer's ability to secure solid financing and unwilling to take the house off the market while the buyer tried.

"We have quite a bit of equity in this house," Victor Kepler said. "How does that affect the choices we have to make? Well, if in order to sell the house, we have to cut into that equity too much, then it may not be worth it to us to make the move."

Too late to turn back

As the asking price on their Shorewood house keeps falling, the financial and emotional burdens keep mounting for Dave and Kim Mantel, who take ownership next month of a new house in Tucson, where they plan to retire.

"When we made our decision last December to go ahead and start the Tucson construction, we couldn't have envisioned having this much trouble selling our house," Dave Mantel said. "We knew the nationwide market was having trouble but Seattle seemed immune. We just couldn't have picked much worse timing."

The house in Shorewood, which is between West Seattle and Burien, has a panoramic view of Puget Sound and the Olympics. The Mantels put it on the market in April after a remodel. They've lowered the asking price four times — the last a $50,000 drop to $799,000 — but have yet to receive a firm offer.

The couple already moved to the Southwest, where Dave will finish out his career with a stevedoring company in Southern California. He will spend weekends in Tucson.

The couple has built a lot of equity in the Shorewood house, which was to help with the down payment on the Tucson house. But since the Shorewood house hasn't sold, the Mantels will have to take out a much larger mortgage on the Arizona home.

"We've committed too far and too deep into Tucson to turn back now," Dave Mantel said. "We aren't going to resort to foreclosure in Seattle or lose the Tucson house, but it could add another year or so of me working before I can retire.

"We won't get out of this cheaply or painlessly, but at least we can handle it financially until we get the house sold."

Stuart Eskenazi: 206-464-2293 or seskenazi@seattletimes.com