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Buyers' Beware Market

Get to know yourself as a homebuyer before committing to any deal

By Broderick Perkins

November 17, 2008

Living in a Bubble? Mortgage Crisis? Act Now to Avoid Foreclosure • Avoiding Foreclosure Takes More Than Hope --- • Consumers Fall Further Behind in Payments • House Democrats Seek Bankruptcy Rule Changes • Pending Home Sales Post Record Drop • Home Prices Plunge in October • Navigating the Mortgage Modification Maze • Mortgage Rates Reach 37-Year Low • Boomers Facing Tough Social Security Choices • Is It Safe to Buy a House? • Mortgage Modification Meltdown • Mortgage Defaults Still Rising • Mortgage Rates Take Another Sudden Drop • Fed Slashes Rates to Near Zero • Consumer Prices Plunge in November • Home Values May Fall More in 2009 • Americans' Net Worth Plunges Nearly $3 Trillion • Surge in Mortgage Applications Doesn't Last • Pending Home Sales Slide in October • Get Your Mortgage Rate Lock Ready • Modifying Mortgages Isn't Slowing Default Rate • Mortgage Delinquencies, Foreclosures Surge • Mortgage Applications Surged 112 Percent Last Week • GAO Calls for Better Bailout Oversight • Homes Lose More Value In Third Quarter • Home Prices Post Record Decline • Fed Throws $800 Billion Lifeline to Consumers • Existing Home Sales Drop in October • When in Doubt, Leave Nothing Out • Fannie Mae and Freddie Mac Suspend Foreclosures • Consumer Prices Plunge in October • Paulson Rejects Bailout Money for Detroit • Another Glimmer of Hope in The Housing Market • Buyers' Beware Market • FDIC Backs More Aggressive Loan Modification Plan • Housing 2009 Forecasts Mixed, But Mostly Grim • Foreclosures Up Five Percent in October • Feds Shift Gears On Bailout, Puts Focus On Consumers • More Homeowners Under Water in Third Quarter • Feds Mount New Effort to Help Struggling Homeowners • Lenders Embrace Workouts for Struggling Homeowners • Obama Can't Quickly Raise Homebuyers' Hopes • At Last: Bailout Trickling Down to Struggling Homeowners • New Home Sales Rise in September • How to Appeal Your Property Tax Bill • Existing Home Sales Rise in September • Administration Considers More Help for Homeowners • Foreclosure Activity Drops in September • Southern California Home Sales Surge 65 Percent in September • HOEPA: New Hope for Outlawing Abusive Mortgages • FDIC Chief: Not Enough Help for Homeowners --- • More ...

Lower prices and potential housing market deals alone shouldn't be enough to commit you to buying a home. Get to know your home-buying self first.

More home buyers have a better chance now than at any other time in nearly a half decade to negotiate a home-buying deal that costs less and comes with some concessions thrown in.

In many locations, buyers will find a glut of new homes, more motivated sellers, foreclosures, auctions, short sales and other market conditions that can make it a really good time to buy.

That doesn't mean throw caution to the wind.

The same conditions that lure buyers to market also lure misfits looking to cash in on your unfettered haste and the waste left from a boom market gone bust.

No matter what the market conditions, it's also always a buyers' beware market, now perhaps more than ever.

Here's how to begin to navigate today's housing market, step-by-step, and make a good deal without getting taken.

Begin with making a personal "right-time-to-buy" decision

If you stretch financially beyond your means to go after lower-priced homes, foreclosures or short sales, you could be setting yourself up for failure. Today's housing market is littered with home owners who borrowed more than they could afford.

On the other hand, if you wait for prices to fall further you could miss out on a good deal. No one knows when the market hits bottom until it begins a sustained upward turn and you can look back and actually see bottom.

Buy now because it's the right thing to do for you, because you need a roof over your head, because it's more affordable than renting and because you plan on sticking with the home long enough to make the deal pay off. Buy because homeownership is integral to your budget, your lifestyle and your goals.

Get to know the many facets of home buying

You've got a lot to learn, but obtaining a broad base of knowledge about the home-buying process is a relatively easy task, requiring only your time and attention. A glut of information is available on the Internet, from real estate industry-sponsored seminars and workshops and through a vast library of real estate guide books.

You can also sit down with real estate agents (including exclusive buyers' agents, who never represent sellers), mortgage brokers, loan officers and accredited home ownership counselors. Post-secondary education at colleges and universities is also available.

Get to know your local market

Accept national news for what it is, a broad brush stroke of current events. You want housing news and information that really hits home. Get your housing market information from credible publications and broadcasts covering your market.

Part of your homework should include learning the boundaries of your buyer's market. Your market can be designated by a ZIP code, a small neighborhood, a greater community or some larger region.

Learn your property's true value

Whether it's a new home, resale property, foreclosure or short sale, learn the true value of any property you are considering. Uneducated buyers tend to lowball sellers and ask for too many concessions. That can alienate the seller, especially those less motivated with top-value homes. Likewise, knowledge helps prevent you from spending too much.

In both cases, use a real estate agent schooled in the history of local market trends and statistics. See comparables, track sale prices in your shopping area, use the local newspaper, online listing and for sale sites and other sources, to keep tabs on asking prices. Also visit open houses.

Check your credit

Your credit report is free from AnnualCreditReport.com, the only federally regulated source. You may have to pay a nominal fee for your credit score (a numerical scoring of your creditworthiness) depending upon your state law and other factors. But see both your score and your report. You may need to request corrections or adjust your credit habits to generate the best report and score -- before you start home loan shopping.

Get your cash in the pipeline

Get approved -- in writing -- for a mortgage. Use your newly gained knowledge to shop around -- a lot -- for a home loan. Shop online and off. Shop mortgage brokers, loan officers, credit unions and other lenders. Shop where you bank, shop where you don't. The key is exhaustive comparison shipping to get the most money at the cheapest rate.

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Broderick Perkins parlayed 30 years of old-school journalism into a digital real estate news service, the DeadlineNews Group, offering "News that really hits home!"™. The Silicon Valley bootstrap includes the Web site DeadlineNews.Com and the back shop Deadline Newsroom. Contact him at news@deadlinenews.com.

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