by Alexandra Heep

Created on: September 07, 2009   Last Updated: November 28, 2010

One might think that buying a home in a buyers market would be easy. After all, there are plenty of choices to find the perfect home, and sellers are thought of as desperate and willing to accept ridiculous offers. This mindset can actually create problems for the buyers. For one, it can cause much wasted time because they pick out every flaw in every house they see and exhaust themselves looking at properties. Secondly, reputable real estate agents are not likely to submit really bad offers because they need to maintain their professionalism and working relationships with the agents who receive the contracts.

However, with a few simple things to consider, buying a home in a buyers market can be a very enjoyable experience. The very first step is to find your budget and stick to it. This amount does not necessarily mean the loan amount you are pre-qualified for. While mortgage lenders now are more careful in their lending practices, generally loan amounts are based on your annual income, while rates depend on your credit score and history.

Keep in mind that even with tightened guidelines, mortgages are based on your present and recent income and credit circumstances, not your future expenses. You need to sit down and make a budget with all your expected expenses (excluding current rent or mortgage). Remember, if you are currently renting with all or some utilities included, that as a homeowner you will be responsible for all utility payments. In addition, you need to figure about one percent of the potential home value for annual maintenance costs.

Then you subtract your expenses from your income. With the amount left, you can evaluate what you can afford for a monthly mortgage payment. From there, you can calculate the maximum house you can afford by applying your interest rate and term of the loan, usually 30 years.

All this may sound like a lot of work and no fun, but these steps are very important. If you skip the budget part, you may find yourself in a wonderful home, but without any money left over to enjoy life (this is called house poor), or even worse, in a situation to sell a home at a loss.

Now you select areas and make your list of desired features in a home and hire an agent to perform searches for you. This is where your budget comes in; your agent will only search homes up to your maximum home value in your specified locations. If an agent tries to pressure you to use your maximum pre-qualified amount instead of your budget amount, get

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