How to Buy a House in a Down Market

To buy a house in a down market is like witnessing a blue moon -- a once in a lifetime opportunity. Thank your lucky stars, first time home buyers especially, that our govenment sucks and everything's going to hell, because now you get to buy a house in a down market and watch it appreciate! Equity city, baby! Now there are definitely some pitfalls. To buy a house in a down market safely, follow a few guidelines.

Things You'll Need:

• Preapproval

• A notebook for EVERYTHING

• Many motivated agents

• A vision for what you want

PREAPPROVAL. PLEASE get preapproved. To buy a house in a down market means that credit is TIGHT. That's part of the reason you're getting better deals, is because there aren't as many buyers. Go to the bank you got your car loan from, or the bank with whom you have multiple accounts. (Mutual funds, IRAs.) Mortgage loans are really up to the person you talk to. They have a lot of leeway. So especially if you're a business owner like me who does not get W2s, you need someone who knows you. Preapproval also keeps you from many built in traps, most of which I wouldn't even have time to discuss here. Whatever. It's like not even a concern. Get preapproved, and carry that preapproval letter in your back pocket throughout this entire process. If anybody starts talking money this, loan modification that, just say, "It's covered. Talk to me about out the door prices ONLY." Save you a WHOLE LOT of trouble. After you get preapproved, your credit score or credit rating now has no more bearing on your actually getting into a house. Congratulations! Stick it to the man!

GET MANY AGENTS. Remember, the agents are representing the SELLER, and have no real obligation to get you the best price. To buy a house in a down market means that sellers are on the defensive. So you kind of have to treat real estate agents like hostile witnesses on the stand. Be nice, but be wary. Do NOT sign any buyer's loyalty agreements which require exclusivity or that a bid is final. Most reputable mortgage companies won't even offer this, but some shiesters will. Stick with the big guys who didn't take it up the arse in this whole real estate bubble bursting fiasco. Century 21 is a good one.

LOOK YOURSELF. Just like the stock market, the Internet has made available much information that was formerly only available to real estate agents. Just Google "real estate" or "foreclosures" in your area. Craigslist your area. Backpage your area. It's all there. To buy a house in a down market, you must be willing to look yourself to keep your agents on their toes, if nothing else.

KNOW THE DIFFERENCE BETWEEN AS IS AND NOT. Foreclosures and short sales are usually "as is," which means the owner, obviously, is trying to get out of the property as quickly as possible. You have to watch this, because they might be angry, and adopt a "scorched earth" mentality, meaning they trash the place before they leave. If you don't protect yourself AT CLOSING against this, there's really nothing you can do. Just say to your agent, "I want scorched earth protection." They might look at you weird (they did to me), but I don't care. I'm spending a lot of money here. To buy a house in a down market means you have to negotiate people's anger at not being able to keep their home. You are profiting off of someone else's misfortune, and you must protect yourself.

BIDS. Because you handled that situation in your agent's contract, you can give multiple bids without danger of being forced to buy them all should they be accepted. Treat the sale like eBay. Timing your bid at the end of the sale will make sure that others don't outbid you at the last minute. Also, you give the seller leverage if you show enthusiasm or bid early. They use that to drive the price up. Bid on many, bid late. To buy a house in a down market is to make sure you KEEP it a down market. :)