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4 tips for buying a house in a buyer's market

Now is a great time to buy a house. Prices are falling, and so are mortgage rates. Millions of houses are for sale, and sellers are getting anxious.

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That's one way of looking at it.

Alternatively, you could say: This is a bad time to buy a house. Prices might be lower in a few months. Same with mortgage rates. With more than 4 million houses on the market nationally, and more being added daily, sellers are bound to become desperate. Why not wait them out?

In many places, it's a buyer's market in real estate, with sellers outnumbering potential purchasers. The resulting downward push on prices makes buyers happy. But it complicates matters for buyers, too. In some markets, there are too many choices to sort through. Even more bewildering, buyers wonder if they should wait a few months.

"They're worried that they're going to buy too soon, and the figures will reduce, and by the time they go through the transaction, they'll have negative equity," says Mario Villena, vice president of Homekeys, a Miami-based online real estate brokerage. But, Villena adds, in every market there are people who are serious about buying and don't get sidetracked by market forces that aren't under their control.

For home buyers, experts have some advice:

If you find the right house at the right price, buy it
If you're serious about buying a house, this is both the first step and the final goal. To put it more precisely, you have to decide whether you will actively shop and then negotiate a fair deal, or if you'll just passively browse houses, hoping to stumble on a steal.

You're more likely to succeed with the active approach instead of waiting (possibly in vain) for prices to fall further. You can't predict when the local market will hit bottom. Even if prices do fall, someone could buy your favorite house out from under you. Diane Saatchi, a real estate agent with the Corcoran Group on Long Island, N.Y., draws this analogy: "It's like when you find a dress that you like, and you wait for it to be on sale, and then the sale comes and they don't have your size. Theoretically, you saved 20 percent. But you don't have your dress."

There's always the possibility that you'll buy a house and then the value will fall. In the 1990s, Southern California and South Florida had housing slumps in which it took years for prices to recover their previous levels. It could happen again, there or elsewhere. For that reason, "buy a home that can grow with you if necessary," says Elizabeth Razzi, author of "The Fearless Home Buyer."

Next: "Look to the long term."
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