Keller: We’re not seeing any properly qualified buyer being turned down for a loan. But even more important, every foreclosed home automatically has financing on it, from the bank that owns it. From a buyer point of view, this is the market we’ve all been asking for. In most cities it is one of the greatest buyer’s markets we’ve seen in a long time. From a seller’s point of view, it varies. If someone bought a home in the last five to six years and put little to nothing down they might not be in a position to sell without bringing money to the table. But if they want to move up, this is the perfect time to do it. Any loss they take on the sale could very well be made up on their new purchase.

Riggs: Two months ago commercial real estate was actually doing reasonably well. Transactions were happening, though they were slowing down. But today people are pushing away from the table, both on the debt and the equity side. Very well seasoned institutions and investors that up until 30 days ago, before this free fall, were confident they could weather what was happening, now are just walking away. They’re not calling you back. People that committed to transactions are backing away. There used to be this reputational risk element to deals, but even the biggest players are saying, “No, I can’t stomach this” and just walking away.

RM: What other measures could the federal government take to help get real estate moving?

Riggs: There should be a close examination of this mark-to-market accounting. A lot of people say you can’t throw it out—this is the transparency we need—but the problem is, even if you read fair-market rules—and the SEC has sent out a clarification on them—it states that, if you’re in a market that doesn’t have [fair-value observations, then you can be exempted from basing valuation on what comparable assets are selling for]. Or let’s say that for residential the only observation you have are at fire-sale prices, what good is that accounting rule if you’re marking everything down to fire-sale prices? It doesn’t make sense. So I think that should be the next close examination and it wouldn’t surprise me if in fact that [exemption] isn’t extended for certain companies or financial institutions just for an interim period. I think that would be a wise choice because the fulfillment of fair-marketing accounting, while the spirit and appropriateness is exactly on target, [can’t work when you’re] in an environment like this one.

RM: What will be the most reliable sources of financing going forward? Local banks? At what terms and costs?

Keller: So far, it’s business as unusual. Lenders who have money are lending and banks that own houses are lending on those houses. The real estate market has actually shown signs of short-term progress. Beyond that, these are questions no one knows the answer to. In other words, we’ll know it when it happens.

Riggs: There’s still money out there for good product but its high equity, so you have to be prepared for the market only providing capital for those until we get through this period. The private market has to lower its expectations, require more equity, put up better underwriting, provide better disclosures, and price risk better. Even with this rescue, we’re going to go through a slow economic time, with high end unemployment, and it’ll probably last for six months. People will want to see the problem fixed tomorrow, but it won’t be. It could take a year and a half for us to get back to where the market is functioning so that people are comfortable that things have been priced right, the proper credits are available, you’re lending to the right individuals, and the right institutions. But it’ll take until 2010. I would anticipate the residential market will show some rounding out if we can get through this, probably toward the second quarter of 2009.

Find information and resources on the credit crisis at REALTOR.org.