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Special section 7 Bankrate experts with 7 top tips for '07

Take note of these home-buying and home-selling strategies in a down market, from Real Estate Adviser Steve McLinden.

 

Home buying or selling: 7 top tips for '07

In most parts of the country, the New Year will dawn on a housing market that's shockingly different from just a year ago. Overzealous speculation, too-lenient lending and aggressive overbuilding have combined to create the type of home-inventory levels and price stagnations that haven't been felt in the U.S. since the early to mid-1990's.

In short, the housing market, after a historic run-up in prices, is correcting. While that's of little concession to current and would-be sellers, it's not the end of the world either, especially if you don't need to sell immediately. Economics elsewhere are encouraging. Recession doesn't appear imminent. Wall Street appears healthy. Unemployment is low, and the general economy is good.

The market, as it always does, will reach equilibrium again, though probably not before mid-2008 or so, most economists estimate. So reset that panic button and sit back to raise a glass to 2007 as a transition year that will bring us one step closer to healthier home sales. In the meantime, take note of how home-buying and home-selling strategies change in a down market.

Here are seven selling tips and seven buying tips, for '07, that could help save you a little grief in the short term and a lot of money in the long term.

7 selling tips for the down cycle

1. Price to sell. If you really must sell now, don't mess around. List your house based on what the market dictates today, not the prices that friends, relatives and co-workers got last winter or last spring. And consider that some -- certainly not all -- real estate agents may suggest you hang on to a higher sale price in hopes they'll earn higher commissions. At the same time, be wary of agents who will urge you to set an excessively low price -- just so they can collect fees.

2. Consider all credible offers. Holding fast for a better offer might put you in a situation where you're merely playing catch-up with a moving market. Don't assume there'll always be another offer coming down the pike. You may need to come off your price 5 percent in some areas and 10 percent or more in others.

3. Offer to proffer. Buyers are requesting all kinds of enticements to spice the pot. Club memberships, prepaid lawn maintenance, moving-expense reimbursements, all appliances included and liberal repair credits are just a few possible throw-ins. Don't be shocked if you hear, "Throw in that plasma TV and we've got a deal." Consider in advance how far you'll be willing to go, but draw the line, however, at "first-born child."

4. Catch the wave at the source. Prepare your home for sale at the very earliest point this "spring" (actually early March or even late February), the time when seasonal buying interest is just starting to build.

5. Preserve your equity. Until the market stabilizes, refrain from borrowing from home equity (or raiding your 401(k), for that matter) to pay your bills, or for vacations and other purchases.

6. Gain in a sell-buy scenario. If you'll be buying another home at the same time you're selling your current one, the price reduction on the new one can compensate for the "loss" you're taking on the old one. If you plan a "move up" to a better neighborhood and are paying 10 percent below list after selling your old home for 10 percent below list, your net dollar savings will actually be more.

7. Stay if possible. If you're happy in your home and are meeting your expenses but want to sell due to continuing "housing bubble" fears, sit a spell. A home is a shelter first, and investment second. Except for a handful of markets that are still hyperinflated, odds are that it will pay to ride out the storm. Generally, the early stages of a downturn are the scariest because that's when amateur investors are dumping "spec" properties cheaply.

 
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