By the time the dust settles, one thing will be clear: 2008 will be a year most home sellers, homeowners and lenders will want to forget.

At the end of 2006, home prices had dropped 3.5 percent. At the end of 2007, home prices dipped again. As we move into 2009, home prices in 2008 had dropped by double-digit amounts in major parts of the country, according to the National Association of Realtors. In California, the median home price plunged 41 percent from a year ago, according to the California Association of Realtors (although the number of days on the market is shrinking as is the overall housing inventory in that state).

If that wasn’t bad enough, November sales of existing homes plummeted 8.6 percent, to a annualized figure of about 4.5 million. How does that compare with the peak of the housing market: In the top year of sales, nearly 8 million new and existing homes sold.

At the end of 2007, I projected that 2008 would be a real estate market (heavily favoring buyers) made for strong stomachs. A year ago, some economists were already saying we wouldn’t work our way out of this until well into 2009, 2010, or even (according to one gloomy forecast) 2014.

My crystal ball is somewhat cracked, so I don’t know what 2014 is going to look like. But as we move into 2009, the news doesn’t look too good: 53 percent of loans that were modified to reduce principal, payments or the interest rate are already delinquent. Foreclosures continue to rise. And unemployment has suddenly jumped, to 10 percent in Florida, 8.5 percent in California and 7.5 percent in Georgia.

Loss of jobs means more people will be struggling to make their mortgage payments. Likely, foreclosures will go up this year. For anyone who wants to sell to change locations, take a new job or retire, you’ll have a tough time. The vast majority of home sales these days are “distress” sales: homes that have been foreclosed upon and sellers who are “short” and are selling to get out from under the threat of foreclosure. As industry observers note: until we get rid of the backlog of foreclosed home, the market doesn’t look too good for homeowners who want to move on.

Overall, I don’t think 2009 will be a great year for sellers. If you can wait until 2010 or 2011 to sell, you’ll likely be better off. That said, if you want to sell or if you must sell, tackling a few New Year’s resolutions might help:

Overcome any possible objections a buyer would have.

Sellers don’t often understand that their primary job is to not only eliminate any potential objections that would stand in the way for a buyer to make an offer, but to exceed their expectations as well. If your home is competitively priced, and your home’s condition exceeds a buyer’s expectations, you’ll get an offer — even if it isn’t the offer you want.

Get my home into shape before I let anyone see it.

Getting a home into “selling shape” is quite different from even having a clean, beautiful home. You also need to “stage” your home, which means you have to make it look exactly the way a buyer thinks it should.

For best results, stage the home before you invite any real estate agents or brokers in to assess how much it is worth. The agents you interview will be your “Wow!” test. If they walk into your home and say “Wow! What a great place you have here,” you know you’ve done it right.

How do you stage a home? Start by throwing away, giving away, or packing away anything you haven’t used in the last three to five years. You should also give your home a thorough cleaning and address any small fixer-upper projects you’ve been putting off.

Once your home is clean, you can assess what kind of other work needs to be done. Should you give your home’s interior and exterior a fresh coat of white paint? Do you need to power wash your vinyl siding? Should the windows be washed? The wood floor polished? New wallpaper put up in the guest bathroom? Does your landscaping require a visit or two by a professional landscaper? Whatever you decide to do, make sure it’s completely finished before you invite anyone over to see your home.

Finally, move out excess furniture, buy matching towel sets for the bathroom, and make sure you have a new cover with matching pillows for your bedrooms. Your home should look very put together, as if you were auditioning for the cover of a home decorating magazine.

I’ve produced a number of staging videos that demonstrate how a home can be transformed by an inexpensive staging. You can find them at ExpertRealEstateTips.net.

Invite at least three agents to create a comparative marketing analysis.

Often, sellers simply call the agent who sold them their home to list it. While you may end up with that person, you’ll be doing yourself a favor if you invite a couple of other agents in from different firms.

Why? Because each agent will have a different marketing plan and idea about how much your home is worth. If you invite three agents to prepare a comparative marketing analysis (a CMA is a sales tool that analyzes homes similar to yours that have recently sold, presents a marketing plan and suggested list price), one will bring in a higher price, one a lower price, and one somewhere in between. Each may have a slightly different idea about how to market your home, or give you ideas that you can share with the agent you finally choose.

If you don’t like any of the three agents you’ve invited to your home, get some referrals and invite additional agents to prepare a CMA. One good way to get agent referrals is to ask the agents you invited to do a CMA who they think is the best agent in town (other than themselves, of course).

Know what my selling timetable is before I list my home.

Do you want to sell or do you need to sell? If you need to be out in three months or less, you’ll need an aggressive agent with a very competitive list price. If you’ve got six months or a year in which to sell, you may choose to price your home a little higher, or may choose a different type of agent. Knowing when you have to move — and sharing that crucial bit of information with your agent — allows you to choose a correct pricing and marketing strategy.

Be realistic about the market.

Find out what is selling, and what the average number of days on the market is for homes that are selling. Accept the reality of your local market and make sure you price your home realistically. Don’t blame your broker if you don’t get three offers over your list price within 24 hours of putting your home on the market. Sellers who set sky-high prices could wait months for an offer and may wind up with the same price they would have had if they’d priced their home correctly the first time — or a lot less.

Know where I’m going.

Once you’ve decided to sell, you ought to think about where you want to go. Often, people move to another home within the same general neighborhood. But if you’re moving to a different city, state or part of the country, you’ll need to do your homework ahead of time. Start researching neighborhoods that offer the amenities you’re interested in. Don’t wait until you have a contract on your home. That’s the time you should be seriously looking to put in an offer on your new home, not start the process of exploring neighborhoods.

Or, if you’re not sure what you want to do, consider renting on a short-term or month-to-month lease. These days, landlords are hurting and they may be perfectly happy to accept a 6-month lease.

Read all documents thoroughly before I sign them.

Why would someone sign a legal document he or she hasn’t read? I’m not sure, but home sellers do it every day. If you’re going to sell (or buy) in the coming year, promise yourself that you’ll take the time to read and understand the listing contract, offer to purchase, and loan documents for your next purchase. (If you’re taking back a loan for the home buyer, have an attorney prepare the documents so you are sure to be protected.) Unless you’ve got cash to spare, a mistake in these documents and the warranties they contain, could seriously affect your finances.

Set my minimum sales price.

Everyone wants to get their list price. But unless you’re in a strong seller’s market (where there aren’t enough homes to meet the demand), it’s unlikely you’ll get it. That means you’ll probably get an opening offer that’s somewhat below your list price.

In order to negotiate effectively, it helps to determine the minimum amount you’ll be happy accepting for your home — before you put your property on the market. This is a price that will allow you to walk away happy. If you receive an offer with anything above this price, it’s like gravy. If it’s below the minimum price you’ve set, you can negotiate accordingly.

The psychological benefit of a minimum acceptable price is great: It puts you in control of an emotional situation by helping you to distance yourself emotionally from the negotiation process.

Not be driven by greed.

One big mistake many sellers make is to get a little greedy, particularly if the first offer is above the minimum acceptable price you’ve set. Then, the negotiation becomes a game of how much you can get.

Remember, a successful sale means everyone walks away feeling happy. If you get so greedy that the buyer walks away, you’ve let the deal get the best of you. Resolve to be reasonable and you’ll end up shaking hands with the buyer at the closing.

NEXT WEEK: Are your finances in order? If not, I’ve got some personal finance resolutions you might want to make for the New Year.

Jan. 19. 2009.