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4 Ways to Save on Your Next Home

The housing slump is hurting plenty of homeowners nationwide, but there's one group of people that's celebrating: prospective homebuyers.

As one member of our Foolish community discovered, buyers are in the driver's seat when it comes to real estate. Gone are the days when you had to make offers on houses the first morning they were listed. Sellers aren't seeing many bidding wars where they eventually get well above their list price. Instead, homes are remaining on the market month after month, and inventories continue to rise.

It's a game of chicken between buyers and sellers, and so far, sellers have played well. While overall sale prices are down, there hasn't been nearly the level of panic selling that makes those price tags really plummet. However, there are probably quite a few sellers whose patience is wearing very thin -- if they blink first, then the price drops we've seen so far may look like just the tip of the iceberg.

Buyer, it's your market
So if you're in the market for a new home, time is on your side. Sure, you may end up missing the exact bottom of the real estate market. But with real estate out of favor in many parts of the country, there's no reason for you to feel rushed or pressured into acting quickly. Here are some tips for negotiating the best possible deal:

1. Take your time. Buying a house is always full of high-pressure situations. Nearly everyone involved in the transaction -- the sellers, real estate agents, and loan officers, just for starters -- is interested in one thing and one thing only: getting the deal done. But with conditions the way they are, you have all the leverage -- unless you give it up voluntarily. Don't do it.

2. Shop around. Because time is on your side, you can get to really know an area before you buy. Rather than making a blind offer without being familiar with a particular neighborhood, you can compare your top prospects and do more in-depth research on the specific things that are most important to you. Whether it's finding a good school system or living in an area with promising long-term price appreciation potential, make the effort to find the place you really want.

3. Get creative. Are you interested in buying, but don't have the best credit in the world? With the subprime woes spreading to larger firms like Bear Stearns (NYSE: BSC  ) and UBS (NYSE: UBS  ) , you'll find that lending standards have tightened across the board. For instance, First Franklin, a subprime lender owned by Merrill Lynch (NYSE: MER  ) , raised its minimum credit score for 100% mortgage loans by as much as 40 points for some borrowers. Similarly, Countrywide Financial (NYSE: CFC  ) has said that delinquency rates of nearly 20% on subprime loans have forced the mortgage lender to adopt stricter lending guidelines. As a result, you might have trouble getting financing as easily as you would have in the recent past. But don't despair: See if your seller would be interested in doing a private financing deal for part, or all, of the purchase price. Some sellers will do anything it takes to get their property off their hands, and you might be able to negotiate an interest rate that beats anything you could get in the subprime market.

4. Don't jump the gun. Unfortunately, many buyers are also in the position of being sellers at the same time. In the past, it was tempting to go ahead and buy your new house before you sold your original house, especially with easy bridge financing that made it possible. Now, however, you can't count on your old house selling in a timely fashion. If you just can't wait, make sure you put an express contingency into your offer to give you an out if your house doesn't sell.

Learn more
Buying a house is one of the most stressful experiences you'll ever go through. If there's a single piece of advice you need to remember, it's this: Don't panic. After going through all the stress of a home purchase, the end result is everything you hoped it would be.

For more on the basics of buying and owning a home, take a look at our Home Center. In addition, our personal-finance newsletter, Motley Fool Green Light, is jam-packed with helpful advice on everything from saving money on your mortgage to investing for your down payment, and much more. With hundreds of dollars of ideas every month, Motley Fool Green Light will pay for itself in no time. Try it for free for a whole month -- you'll get access to all past issues.

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Fool contributor Dan Caplinger got a good deal on his house. He doesn't own shares of the companies mentioned in this article. The Fool's disclosure policy works well in any market.


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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