10/13/2010 03:22 pm ET Updated May 25, 2011

Sellers in the Shadows

Lurking around the fringes of our current housing inventory glut are scores more potential home sellers. They are standing in the shadows, watching and waiting for the opportunity to add their houses to the "for sale" listings.

As a real estate attorney, I have talked to plenty of these prospective sellers while conducting seminars on "How to Be a Seller in a Buyer's Market." Prior to 2007, the question almost every attendee posed was "What's the best time/season to put my house on the market?" A seller who wanted to be out after school ended was told to list in March or April, and a seller who wanted to stay through the winter holidays was advised to start advertising in August or September.

I rarely hear the timing question since my recession-era lecture includes the grim news that current housing inventory may linger unsold through a year of holidays. Instead, I am asked time after time, class after class, year after year since 2007: "Do you think home values in our area have reached the bottom yet?" I shake my head and say that our descent is not yet complete, though we may now be only a few stairs short of reaching the basement.

My negative answer is an unpopular one. Homeowners who have kept their plans on hold for years, waiting for the market to cast off the cobwebs of its collapse, want me to tell them that the sun will soon shine. They believe that once these days of reckoning start receding for real estate, they'll quickly sell their homes at a post-recession profit.

I warn these would-be sellers that the days of buy high (or borrow big) & sell higher may very well not come back any time soon, if at all. And that they, the stealthy sellers waiting to pounce on any market upswing, may be a big reason why the recovery won't be steady and swift.

Based on my observations, those biding their time to move up, or down, or out of their present housing are a fairly large group. I imagine the scenario will play out at some future date like this: prices will stabilize after a period of reasonable interest rates, the addition of jobs, and a resolution of the fearsome number of foreclosures. A diminishing inventory of houses for sale will be a big part of the market's mellowing, and then bam! A new surge of sellers floods the market with a supply of housing it can't absorb quickly enough, resulting in another storm after the calm.

The sellers in the shade I speak with at my seminars aren't sinister; they have no desire to reinfect any recovery in the housing market. However, from where I sit, the first signs of a real estate resurgence should be disregarded. We need to wait and see how the market treats the shadow sellers once they step into the light.