"Great time" to buy a house

By Linda Stern

WASHINGTON (Reuters) - Mortgage rates are down. House prices are down. Fed chairman Ben Bernanke is waxing eloquent about the prolonged deep housing slump. Sounds like a good time to go house shopping!

"This is a great time if you're a buyer," says Joe Fox, who operates real estate Web sites aimed at sellers and buyers. "You completely low-ball it."

Panicky builders are giving "incentives" on new houses that can run into the tens of thousands of dollars in kitchen upgrades or furnishings like flat-screen televisions. Motivated sellers are chipping in closing costs and dropping prices. "It's an amazing market," says Jason Salzenstein, a publications director who has been house shopping in Boston.

"We're looking at places that we looked at two years ago, and they are $200,000 less now than they were then."

Salzenstein, by his admission, is taking his own sweet time to make sure he does his house hunt right. That means he's waiting for the right house at the right price, and he's using new market tools to secure a competitive and safe mortgage.

Even in a buyers' market, buyers can make expensive mistakes. There are some new tools and techniques that can help ensure you make a good deal and not a damaging one.

Here are some ways to go about your search.

• Know your market. Picking up a bargain in a solid real estate market like Boston is one thing; buying cheap in a market where the economy is ailing is quite another. Overbuilt condominiums still might have farther to fall, as might home prices in some slumping Rust Belt cities like Rochester, New York, and Cleveland. Those newly developed exurbs -- expensive tanks of gas away from metropolitan areas -- might still be a risky buy. One place to pick up deals, especially in the fall, is in summer beach resorts from New England down to North Carolina, where buyers may not want to wait until spring to unload their property.
• Squeeze your real estate agent. Sellers' agents are suffering right now, and are doing everything from painting bedrooms to cutting commissions in order to help move their listings. But buyers' agents have it easy; there's an abundance of homes on the market.

If you're willing to do a lot of the legwork yourself -- looking at open houses, searching multiple listings (at realtor.com) and the like -- why not look for a reduction in the 2.75 percent to 3 percent your broker is likely to take on the deal?

Joe Fox's company, Buysiderealty.com, is an online real estate agency that currently is rebating 75 percent of its commissions to buying customers. This is not full service; you have to find the house yourself. But if you've done that, you can save significantly. So far, the site's biggest kickback was $78,000 to a customer who bought a $4-million home; its smallest was $3,800.

• Find the right mortgage. Some online mortgage Web sites claim to weigh competing offers, but they're often only weighing the offers that will pay them the most. And even under the eye of regulators and others unhappy with their industry, mortgage bankers still have a way of burying salient details in documents you can't understand, or get in time to make good competitive decisions.

One new Web site, OfferAngel.com, exists as a way to comparison shop whatever mortgages you can find on your own. The site sends a questionnaire to your banks or mortgage broker, and then presents a report to you that lists all terms and conditions of the mortgages you're considering.

You'll be able to compare adjustment terms of variable mortgages, closing cost estimates and any hidden fees in the loan packages. It costs $20 to get a detailed report, though you can get a simple comparison for free. That's how Salzenstein found his loan.

If you're borrowing a lot of money and expect to keep the mortgage for a long time, you might want to go even further, spend $295 at loantech.com, and let a professional audit your mortgage. Sooner or later, the housing slump will end and real estate prices will rise. It would be nice to own a place by then.

(Linda Stern is a freelance writer. Any opinions in the column are solely those of Ms. Stern. You can e-mail her at lindastern@aol.com.)