20 steps to get the best deal on a home in 2007

When it comes to real estate, timing is everything. And if you're buying this year, your timing is perfect.
For most homes in most areas, it's a buyer's market. That means you'll see plenty of houses on the market with prices that have slowed, stabilized or, in some places, even declined. And motivated buyers will likely be more amenable to making concessions.
"For someone who's been sitting on the sidelines, it's a great time to buy," says Eric Tyson, co-author of "Home Buying for Dummies."
The biggest problem many buyers may encounter: too many choices. But that's not a bad problem to have, says Colby Sambrotto, chief operating officer of ForSaleByOwner.com "See everything in your price range so you can make an informed decision," he says.
Spring and summer tend to be the prime home-buying season. And in many markets, buyers will have a lot of options. Want to make sure you get the best home for you? Here are 20 steps to help you get the best deal on a home this year:

1. Know your score. Pull your credit report and purchase your credit scores. "It's especially critical this year because the government has started cracking down on mortgage lenders offering nonstandard financing," says Chicago-area attorney Diana Brodman Summers, author of "How to Buy Your First Home." A small change in your credit rating can make a big difference in the amount you pay for your home over the life of a loan, or even whether you'll be offered a loan at all.
Do this early because if you find mistakes that lowered your score, you'll need time to correct the record before you apply for financing. And, if you find that your scores are correct, but lower than you expected, you can change your habits, pay down some balances and rack up a few more months of good marks on the record before you obtain financing.
2. Get preapproved for a mortgage. Preapproved, not prequalified. Prequalified simply means you're good for the loan -- if your income, debts, credit and other factors are exactly as you stated and can be documented. In other words, it's more like wishful thinking. Preapproved means these things have already been checked and verified. This is always a good idea in any market, especially now. Along with a lot of housing choices, there are many more selections on the mortgage menu in recent years too, says Tyson. Sorting out the mortgage first will let you concentrate solely on the loan terms, without the added pressure to choose something quickly or risk losing your "dream house." Since you're likely to have more options in terms of properties, this step will also help you narrow the field to only those homes you can truly afford.
3. Determine your dollar limit. Decide how much you want to pay, not just how much you can pay. The maximum for which you qualify isn't automatically the amount you want to spend, says Summers. You may want to buy less house to allow for a future where one of you might want to stay home with the kids or make a career change. "Everyone would like to see you move into a bigger house -- they would get a bigger fee," says Summers. "But that's no good if you're miserable." And if you get overextended and life throws you a curve, like a job loss or family illness, "you have to have a fudge factor," she says.

4. Make a list, check it twice. Another way to narrow your search in a market with many choices is to really zero in on the individual features of your future home. Which items do you really need? Which do you merely want? Which don't matter? And what would be a deal-breaker? "You've got to make sure that what you're looking for is really what you want," says Patricia Fitzgerald, broker/owner of Coastal Properties in Jupiter, Fla. If you're buying the home with a spouse, make up your own separate lists first, then try to integrate them. That way, you approach sellers and agents as a united front -- and you're more likely to get what you want.
5. Do your homework. If there are communities you like, do the in-depth research now. Buyers, especially in a market with a lot of choices, "get caught up in finding the 'perfect house,' and don't do their research," says Tyson. Instead, "you want to be able to take advantage of the fact that we've got a lot of choices."
Study the quality and cost of living. If you're semi-local, shop in the community for a week or so. Buy groceries, gas and all the little necessities in the same places you'd patronize if you already lived there. Sample the way of life by checking out things you use, like libraries, health clubs, bookstores, restaurants and movie theaters.
Test the commute. It's one thing to drive an area on Sunday morning and look at homes. It's another to roll out of the driveway at 7 a.m. Monday morning and fight commuter traffic. So drive it during rush hour. And if you want to use public transportation, check out those options, too.
Scope out the schools. If you have kids, or are planning a family, research the neighborhood schools. What do they look like, and what kind of reputation and scores do they enjoy?
Read the newspaper. Almost every community has a local paper. Subscribe -- via mail or online, and keep up with the local happenings. From water quality to zoning, you're likely to get the inside information you really don't get anywhere else.

6. Hire a buyer's agent. A good real estate agent can help you focus your search and avoid the pricing pitfalls. Ideally, you want "someone patient, someone focused on the neighborhood you're interested in," says Tyson. Talk to several agents. "Have they taken advanced classes or received a designation?" says Fitzgerald. "Is it somebody that you feel comfortable with, somebody who's going to listen to your needs? Is what you're looking for what they're showing you?" Don't fall victim to the trap that you can save money by not using an agent. The seller, after all is paying that agent in most cases, and even if there's only half a commission involved, don't you think the seller wants to save that same amount you have your eye on?
7. Don't trash the house. It's become almost routine to point out all the things you don't like about a house to shake the seller's confidence and try and bring down the price. This can be a crucial mistake. First, it makes them angry. Second, once you've insulted their house (and them), it's going to be tougher to get them to negotiate a good price. If you're at the stage where you're making an offer, but there are details you really can't live with, be tactful and kind, says Ron Phipps, broker with Phipps Realty in Warwick, R.I. Instead of declaring that their 1950s kitchen is horrible, say "I understand the kitchen is original." Then follow with something along the lines of "obviously, competing houses have been updated and that would be a priority for me," says Phipps.
8. Study comparables. Do this before making a first offer. When you look at the comps (which should be within six months and ideally within three months), what's the relationship between the list price and the sales price? That's going to give you a good idea of just how much room you have to bargain. And just how much your first offer cuts from the asking price can vary with the town, neighborhood and price range. "In some areas of the state, people wouldn't be distraught," at an offer than came in 15 percent to 20 percent below the asking price, says Phipps. "In my area, the sellers would be offended and you wouldn't get a counter offer." And that's why it can pay to have a professional on your side. Especially in today's market, "you need a buyer's agent to explain the nuances of the market," he says.
9. Stay current. Keep up with the market while you're shopping. In the areas you like, watch the for-sale signs go up and come down. How long are homes staying on the market? Look at the listing for the asking prices. Comb the local paper to see what they actually bring when they're sold. What's the relationship between sales price, value and asking price? The trends you see can really help when it's time for you to make those offers.

10. Determine the real value of the property. Buyers sometimes focus on how large an offer it will take to "get" the home, and lose site of what it's actually worth. But before you make an offer, sit down and determine, based on tax records, which can often be found online, comparables and the other data, just how much is the property actually worth? Then analyze the relationship between the actual value of similar houses and their selling prices. Often there's a pattern, and that can help you too, says Phipps. In addition, knowing the home's real value serves as a good touchstone to keep you grounded during negotiations.
11. Research the sellers. Are they motivated? Do they have to move by a certain date? While your offer should be determined by how much the house is worth, "There's nothing wrong with doing some intelligence on the seller and using that to your advantage," says Phipps. Your best source: the agent or the sellers themselves. If the listing agent or the sellers are at home when you view the property try to engage them in small talk. Ask them where they're going and why. "It's amazing how many sellers and agents volunteer a lot," says Phipps. A buyer's agent can also help in that area too, says Tyson." Your agent should do as much inquiring as possible on the sellers and their situation," says Tyson. While you do have to get a handle on why they're selling, "If you lowball someone, they're not going to think you're serious," he says.
12. Look at the real numbers. Was it for sale by owner? Have the sellers used other agents? And how long has it really been on the market? The current listing may show that the home has only been on the market two weeks. But it may not show that it's been on the market before -- and recently. Some agents will pull a property off the MLS, and then put it back on the market to reset the clock, says Phipps. A buyer's agent can look at the listing records and determine just how long, in total, these owners have been trying to sell that home. And that can make a big difference in the offer you make.
13. Leave room for a second offer. Many sellers will assume that if you knock $20,000 off the price the first time around, you're looking for a counteroffer that will reduce the asking price by $10,000, says Phipps. But it's a fine line to walk. Offer too little and they won't believe you're a serious buyer; too high and you leave little room to negotiate.

14. Have a backup plan. Don't set your mind on one house and say it's that or nothing. "It helps you remain more objective," says Phipps. And you won't get carried away and pay more for a house than the house is really worth. And if you are seriously considering other homes -- and could be just as happy with other choices, have your agent convey that point, says Phipps. Doing the negotiating yourself? Be respectful and honest. Alert the seller to that fact without threatening them with it. Something along the lines of "we're looking at two other houses, we know the numbers there are workable and we can get either at a good price." But don't say it if it isn't true.
15. Put all extras in your first offer. Negotiations are more elastic in the beginning, when the buyer and seller are most likely to want to reach an agreement, says Phipps. It's a lot easier to include that entire list of concessions or repairs in the beginning than to drop it in at the very end. And that list should include a warranty deed and title insurance, he says.
16. Don't let them play mind games. "If you make a good offer, within the realm of reasonable, and the seller rejects it outright, move on," says Phipps. Some sellers don't really want to sell. Others like to play games. And that just slows your search for a home. "In this market, it makes sense to take advantage of the breadth of inventory and deal with a seller who wants to sell," he says.
17. Surrender where you can. You're going to be dealing with the seller throughout the process, so on points where it really doesn't matter, giving ground can be smart, says Phipps.
18. Call your insurance agent. How will the neighborhoods you're shopping affect your home and auto premiums? Your agent will be happy to tell you. And it's even more important since some areas are seeing large increases in premiums in the wake of natural disasters. "It's free knowledge," says Summers. And like the price of groceries in your new community, "it all goes into the cost of living and you never think of it until you move there."
19. Call the power company. Look at your current power bill to see just how much juice you're using each month. Now call the would-be supplier in the neighborhood you're considering. How much would it charge for the same power? "It may require a little math," says Summers. But it can save you from sticker shock after the move.
20. Educate yourself. "Education is more valuable now," says Tyson. "People have trepidation and fear because they realize that real estate doesn't go up every year." But with low rates and decent prices on housing, he says, "it's a good opportunity to get into the market."
Dana Dratch is a freelance writer based in Atlanta. March 8th, 2007

Northeast home sales overcast but clearing

Excess inventory and a sluggish employment picture left the real estate market in the Northeast under overcast skies but forecasters see a break in the clouds on the horizon.
Slow building growth in the Northeast means the area's supply and demand "are reasonably in balance," says Bernard Markstein, senior economist with the National Association of Home Builders.
The Northeast has enjoyed "higher prices than the rest of the country," particularly New York, Boston and some areas of New Jersey, says Yun. A median priced home runs about $274,600 -- about 25 percent higher than the national median -- according to National Association of Realtors (NAR) data.
Even in those places, some excess inventory has left the market "a little soft" says Markstein.
"Things look sluggish, so the recovery will be a little slow," he says. "Job growth is below the national average."
At the start of 2007, inventory is about on par with the rest of the country, which means that at the current sales rate it would take roughly 7.2 months to sell all the homes currently on the market, says Lawrence Yun, a senior economist for the NAR.
And while that's high (anything over a six month supply signals a buyer's market), it's "not anywhere near alarming," Yun says. In addition, sales rates have also slowed. His prediction: a slower recovery than the nation as a whole.
Homeowners and sellers will likely enjoy a good forecast this year. While prices in the region were down about 5 percent on average for 2006, that's "at or near an end right now," By the end of 2007, the region should see average gains of 1 to 3 percent in value, matching the national trend.
Some areas are already looking up.
In Providence, "our market began to correct in August of 2005," says Ron Phipps, broker for Phipps Realty in Warwick, RI. Sales rates started to drop off last year "because buyers knew it was a buyer's market and sellers refused to acknowledge that," he says.
"The funny thing about that is it's not a huge swing from where they were," Phipps says.
In the Northeast, "most of the states are seeing a rebound of sales rates," says Ken Libby, a regional vice president for the NAR in New England.
In the region, "Boston had the toughest go of it during the summer," Libby says. "A significant increase in inventory" coupled with job pressure. But the market "has flattened out" now, he says.
Over 2006 "prices softened a little," in some areas of New England, says Libby, also the broker/owner of Stowe Realty in Stowe, Vt. Prices were up in Massachusetts, Connecticut, New Hampshire and Vermont just under or above 2 percent, he says.
He expects that sales in the region will increase. "This year, I think the prices have adjusted," says Libby. "I think the new listings coming on the market reflect the adjustment. I think we'll have an average year, if not above average."

Posted 8 March 2007 Dana Dratch Bankrate.com

Media coverage can dampen real estate market

Fact or fiction: The media decides whether you buy or sell a home.

Sounds ridiculous, even insulting. But many real estate professionals insist there is a psychological component to buying a house -- and that a lot of negative publicity about the housing market can have an effect on whether consumers will buy, sell or sit.
Chances are, when you are thinking about buying a home (and you're really honest with yourself), factors such as your credit rating, income, debt load, the available houses in your market and the prices in your market are going to have more of an impact than what you read or hear over your morning coffee.
But that's not to say the broadcast and printed word don't have some impact.
Many blame the media for the slowdown that hit the housing market in 2006. "What happened to us is the media," says Ellen Renish, regional vice president for the National Association of Realtors, or NAR.
Stories about a real estate "bubble" and its potential to burst caused consumers to "not do anything," she says. "And nothing happened. The bubble stories really stopped things for three months," Renish says. "It was pretty scary."
Looking for deals
When it comes to sales, the biggest factor is "the local economy," says Dick Gaylord, president-elect of the NAR. "But I can tell you that almost every buyer I talk to today thinks they're going to get a phenomenal deal."
In the Midwest this year, one big yardstick is job growth torquing the force of supply and demand. "If jobs come, there will be buyers," says Lawrence Yun, a senior economist with the National Association of Realtors. "And if jobs don't come, there won't be buyers."
"But I think the media does have an influence," he says. "I get calls from Realtors who have been working with buyers for months -- then the buyer reads or hears something that predicts a price crash or large inventory and the buyer decides to wait. The media is trying to portray the reality of the market."
But many times "there tends to be a slight slant that tends to scare potential buyers," he says. "People start placing a lot of reliance on what they read, particularly from major papers."
This is one reason it pays to investigate on your own. Especially since neighborhoods and price ranges in various areas of a region, state and town can be vastly different.
Also, talk with a couple of pros in your area. "You might find out that the market is better than you were led to believe in the press," says David Ledebuhr, regional vice president for the National Association of Realtors.
The long-range viewReal estate professionals would like to see more of the long-range perspective in real estate media coverage.
The real estate market is cyclical, says Ron Phipps, broker for Phipps Realty in Warwick, R.I. "For those of us who've been doing this for a while, this is a normal cycle," he says of the current buyer's market climate. "It's not particularly bad."
He worries that the media "amplifies minor changes," he says. "The media is like the wind: It creates white caps, it creates a lot of excitement -- which can cause people to be overwhelmed."
While talk of a real estate bubble "is great theater," the hard fact is that most people buy a home to have a place to live, Phipps says. The price will differ according to what a buyer can afford, but that basic need is always there.
Real estate professionals have also seen a wide range of interest rates in the past two or three decades. And while nobody likes to see climbing rates and the bigger mortgage payments that result, some agents remember when rates for a typical home were in the teens. And, they also remember that lower home prices added some balance to the equation.
"I sold houses when the rates were 16, 18 percent," says Renish.
"And I bought my first house at 9 percent," she recalls.
What part does the economy play?
From a practical standpoint, many of the areas of the country that are seeing depressed growth or declining prices can link it to one or more of several factors: a shrinking jobs market or faltering local economy (including a higher number of foreclosures); overbuilding; or speculators who bought to make income or quick profit and dumped the properties when interest rates started to rise or prices started to decline.
Mike Fratantoni, senior economist with the Mortgage Bankers Association, agrees that jobs are the No. 1 factor when it comes to the health of the home market. "Absolutely, the job market is most important," Fratantoni says. "And we think that the Fed's successive rate increases have not quite worked their way through the economy yet. We do anticipate that as these work into the economy, we will see some slight increase in unemployment," likely by the middle of 2007.
And while the media likely has "some psychological aspect" for the buyer and seller, says Fratantoni, "at the end of the day it's the fundamentals" like affordability, a strong job market and income growth that signal buyers that "it's a good time to get in," he says.
When it comes to buying and selling, "I do think there is something about psychology," says Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University.
Nationally, home prices increased 60 percent in the period between 2001 and 2006, he says. "If you bought a home five years ago, you're in pretty good shape as far as equity building."
When it comes to the recent decline, "part of it was psychology," Retsinas says. "We had seen interest rates heading up. As we look back, at some point buyers started to wonder, 'Will these exist tomorrow?'"
In addition, home prices had been escalating so much faster than salaries that "the mortgages couldn't bridge the gap between incomes and house prices," he says. "It's almost as if house prices had to take a breather."
All real estate is localOne common complaint from real estate professionals regarding media coverage is the failure to understand and communicate that all real estate is local. So while a bubble, hot market, flipping trend or price decrease gets a lot of media attention, it doesn't mirror the entire market.
"It's a reflection of something going on in one area, in one dynamic spot," says Dave Dalzell, a regional vice president for the NAR. But consumers hear it and get concerned, he says. Then "we have to take and analyze the neighborhood" where they're buying, he says. "My town just had the biggest jump in home values in 20 years," he says. "We think it will slow down some, but won't lose money."
Ken Libby, owner/broker of Stowe Realty in Stowe, Vt., echoes the thought. "The only argument I have with the media is when people try to paint one picture for the whole country," he says. "And you can't do that."
-- Posted: March 8, 2007 Dana Dratch