Traditional 'Rules' of Home Buying Return

How home buyers can balance the bargain hunt with realistic expectations.

By SHARE

• You can always ask for reasonable incentives. Some ideas: seller pays closing costs, a property-tax installment, or condo/homeowners association fees. Maybe a seller upgrades the appliances or provides a cash credit toward remodeling or repairs. At the extreme end of the spectrum, sellers might be willing to front a few months of mortgage payments. During the market's lows, some sellers creatively tossed in new bikes if, for instance, the home is near bike paths or they purchased local gym memberships for buyers. How far might sellers go to move the property? Buyers and agents armed with local market knowledge will know how to negotiate incentives. The seller is also likely to let the buyer determine the length of the closing, within reason.

[See 3 Recession Home Remodeling Trends Likely to Stick Around.]

• Incentives are great, but buyers may still be responsible for closing costs and should plan on this expense well ahead of house-hunting. The average amount of closing costs and prepaid items needed to cover your closing are approximately 4 percent of your loan amount. Buyers may also have to put up "earnest" or "good faith" money, which is essentially a deposit before moving into the offer/contract phase.

• Regardless of market conditions, there are a few basics to add to the checklist. These can be a jumping-off point for negotiations. Buyers should hire a title company to check the house for liens and tax arrearages; hire their own inspector, not the seller's (have your inspector also check for any potentially unpermitted work, such as an addition) and keep in mind that some states have specific rules about disclosures; and verify property line accuracy by requesting a seller-secured survey, or buyers may have to buy their own survey. Be respectful as you talk with sellers and their agents about these needs. Sellers should also be accommodating, as these steps show that a buyer is serious about the property.

Bottom line: Savvy buyers should know what they're up against and what opportunities abound, as another traditional springtime home-buying season ramps up—this one as market traffic and pricing are on the rise.