Steven Kruschke

By Dian Hymer

When the housing market slows down, buyers often wait on the sidelines for a clear sign that the market has recovered. The only problem with this strategy is that you can only know for sure that a market has turned through hindsight. In other words, you can't time the market.

A slow market is perceived as an opportunity by some buyers, as it takes longer for listings to sell. The inventory of unsold listings tends to grow, giving buyers more choice than is the case in a hot seller's market when listings sell quickly.

In a high-inventory market, there are usually fewer multiple offers so buyers can cut a better deal with the seller. However, it pays to be careful about what you buy and how you finance the purchase.

HOUSE HUNTING TIP: The least expensive home in an area may not be the best investment. Unless you are a contractor with years of experience fixing up properties, you should hire the best inspectors you can find to look carefully at the condition of a property before you buy.

Many home buyers, particular first-timers, don't give enough attention to the cost of maintaining a home. Home maintenance is a necessary part of home ownership. It can be expensive, particularly if you need to hire others to do the work.

Some homes require more maintenance than others. A good inspector should be able to give you a good indication about how much work a home needs now and how much it will need on an ongoing basis. Buying a well-maintained home that will also have relatively low ongoing maintenance is one way to keep your overall housing costs down.

Inexperienced home buyers should resist buying a fixer-upper just because it's offered at a cheap price for the neighborhood. It's difficult to get a firm grasp on renovation costs during the inspection contingency period, particularly if it's a big job.

Remodeling projects can run over budget because of unanticipated problems like faulty electrical or plumbing, or an old furnace that goes bad. Or the city inspector could require that you do additional work to correct non-code-complying improvements done by previous owners. These sorts of costs can mount up so that you end up with far more invested in the property than it's worth on the market.

Try to avoid buying a home that has an incurable defect. This is something that you can't change, like a location next to a freeway. These homes don't hold their value well when the housing market softens.

A risk of buying in a slow market is that the value of what you buy might drop before it rises. Or, prices could stay flat for some time, which means that you won't build equity unless you pay down principal on your mortgage. If you should have to move during a time when prices are soft, you might not be able to sell for the amount you paid. To decrease this risk factor, don't buy for the short term.

Give careful consideration to how you finance your purchase. Stay away from mortgages that have short due dates and balloon payments. If the market in your area stays soft for longer than anticipated, you don't want to be caught having to refinance at a time when your home might not appraise for the price you need to complete the transaction.

THE CLOSING: A benefit of buying in a soft market is that you have the opportunity to buy at a reasonable price, without having to compete with other buyers. But, it makes no sense if you put yourself at financial risk.

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By Dian Hymer

People attend Sunday open houses for all sorts of reasons. There are curiosity seekers; neighbors might stop by to see a house if it hasn't been on the market in years; and some come in search of decorating ideas or to check out prices in the neighborhood. In other words, most people who walk through an open house aren't really buyers.

This fact infuriates some sellers who feel that public open houses are a waste of time for everyone except perhaps the agent holding the house open who might pick up a client. However, in an area where listings are in high demand, public open houses can be an effective way to drum up buyer interest.

When there aren't enough homes for sale to satisfy the need, buyers gravitate to the limited supply that is available. An active open house can create a sense of urgency. This is particularly the case when a listing is new on the market in a sought-after neighborhood.

During the hot seller's market of a couple of years ago, public open houses were a useful marketing tool. In some cases, listing agents held off letting any buyers preview the home until the first public open house, thereby forcing buyers to attend the grand opening en masse.

In most markets around the country, these frothy days are over. Some markets that didn't heat up a couple of years ago are doing well now, like Raleigh, Austin and Salt Lake City. But, generally, the market has softened in most markets that were previously hot.

Even in a soft market, some buyers find the house they buy at a public opening. However, a sale is much less likely to occur this way. In a soft market, buyers are more reticent, as there is less impulse buying than there is when prices are increasing.

In a slow market, there are fewer buyers and it takes longer for listings to sell. Buyers usually have more to choose from. A listing that's held open often in a market like this can send the wrong message. It can telegraph a sense of desperation. Or, it may indicate that the price is high, or that there is something wrong with the property.

HOME SELLER TIP: A strategic use of open houses is recommended in a buyer's market. You might have your home open when it's new on the market, and periodically during the marketing period so that the prospective buyers and their agents are aware that you are still actively searching for a buyer. But, it's generally not a good idea to have your home open every weekend. You might overexpose it to the market.

It's not absolutely necessary to have a public open house to sell your home. The Internet has made it possible for buyers to preview listings without even getting into their car. A good Internet presence for your listing on well-attended Web sites like www.realtor.com, which includes quality photos of the property, is critical. Eighty percent of today's home buyers use the Internet to find a home. When buyers see a listing they like, they request a showing.

There's another aspect of public open houses to consider. If there are a lot of listings on the market, an open house can give buyers an easy opportunity to run through the house and cross it off their list.

THE CLOSING: The most productive showings are the ones where the buyers are accompanied by their agent who can help them work through any objections they might have to the property.

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© 2006, 2007 eProspecting (a division of Dominion Enterprises), RE/MAX ACCORD, Research & Economics Department. All Rights Reserved.

Consultation with an accountant and/or attorney is recommended before entering into any financial transaction. All rights reserved. Agents and company personnel may copy; others may not reproduce materials herein without written permission of RE/MAX ACCORD.