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4 tips for buying a house in a buyer's market
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Villena counsels buyers to avoid the temptation to toss out lowball offers, because sellers won't negotiate if they feel insulted.

"You have to be able to defend that offer as much as the seller has to be able to defend the asking price," he says. "If you're not making a full-price offer, it's not enough to pull a number out of the air. You should be able to show that this neighborhood has 20 comparable homes for sale, and, although I like your property, it's priced 6 percent above the other properties. That gives you a better footing for establishing an objective and reasonable negotiation."

Don't just negotiate with the seller. "Most people think that only sellers pay commissions," Villena says. "They think that buyers are being serviced for free. Most people are not yet aware that there is a commission component reserved for the buyer's agent. And that, too, just like the seller's commission, is negotiable."

How so? Some buyer's agents are willing to rebate a portion of their commission back to the buyer at closing. For a number of real estate brokerages, such as Homekeys, BuySide Realty and HouseRebate, buyer rebates are the focus of the business plan. Expect to make your own appointments to view houses and to drive yourself there if you use one of these brokerages.

Realtors associations in some states have persuaded legislatures to ban commission rebates to buyers.

Avoid gimmicks
You're shopping for a house, not for a Caribbean cruise or a car lease. Recently The New York Times reported on a condo seller who was offering to give the buyer a year's use of a leased Mercedes-Benz E-Class sedan.

Razzi says you'll find all sorts of gimmicky incentives from condo sellers. They offer flat-screen TVs or weekends at vacation homes, or more creative inducements. "That has nothing to do with the transaction at hand," Razzi says. If there's an incentive, make sure it has something to do with the dwelling -- upgraded countertops, decorating allowances, payment of mortgage closing costs, that sort of thing. "If they're willing to subsidize it with a $500 TV, ask for $500 off the asking price," she says.

There's another gimmick to avoid: what O'Connor calls "magic loans." This is the time to avoid mortgages such as pay-option ARMs and interest-only loans, she says. If you can't afford it with a more mainstream loan, such as a 30-year fixed or a 5/1 ARM, you can't afford it. Not in this market, where house values could drop and mortgage rates are almost sure to rise.'s corrections policy -- Posted: Oct. 5, 2006
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