Tips for buyers during the housing cooldown

by Center for Personal Finance editors

NEW YORK (9/13/06)--Buyers in most markets are at a distinct advantage as the number of residential properties increases and a glut of houses floods the market. If you're a buyer during this cooldown, make sure you get the most for your real estate dollar (Realestatejournal.com Sept. 6).

The tide turned dramatically in one year. In 2005, the median price of an existing, single-family home rose by nearly 13%, and a condo rose by 12%. The National Association of Realtors expects those rates of price appreciation to fall to 5% and 4% respectively in 2006 (Kiplinger's Sept. 2006). That hasn't translated to lower prices in many areas, although they've flattened in some parts of the country.

Tips for buyers:

Don't wait for the bottom to drop out. If you do, you may lose out on good opportunities. Experts advise you opt for a good, solid deal rather than wait for a rock-bottom deal that may never come your way.

Stay up on what's going on. Find out what homes are available and how they compare with others on the market, based on sales within the past two months. Ask a real-estate agent for help with a market analysis, or visit RealEstateJournal.com or Zillow.com. Some credit unions offer HomeValueBot on their Web sites. You'll be in a better position to negotiate.

Jump on a good deal, but don't jump too fast. Priced appropriately, houses may sell within a few days, particularly if there's a motivated seller. And if the price drops, make sure you're the first one to make an offer. However, because of the slowdown, buyers have time on their side to check out the many choices available. Wait for what you want.

Request price reductions and concessions. Don't be shy about asking for a price you think is fair. The best time for concessions is when a property has been on the market for 30 days or longer; the seller is more likely to grant your requests than risk losing a potential buyer.

Think outside the realtor. If a home is being sold "for sale by owner," or FSBO, look for cost savings to be passed from the seller to the buyer. About one of five home sellers opts for FSBO. Some FSBO sellers list homes through the Multiple Listing Service (MLS). For more information, visit Realtor.com, ForSaleByOwner.com or Craigslist.org. Or, consider auction houses as another alternative, but keep in mind that they frequently are sold "as is," and it's up to you to determine the quality before bidding. Be prepared to pay a 10% deposit, and you may have 30 days to pay the balance.