Dan Steward

RISMEDIA, February 16, 2011—The Case-Shiller Index is one of the country’s most popular ways of measuring the movement of home prices. And in its latest rating, which went out in late December, the verdict was: Prices are down. The Case-Shiller report’s 20-City Composite rating was 0.8% lower than it was one year previously; the first year-on-year decrease since October 2009.

In some markets, sales were the worst ever—as the report noted: “While the composite housing prices are still above their spring 2009 lows, six markets—Atlanta, Charlotte, Miami, Portland (OR), Seattle and Tampa—hit their lowest levels since home prices started to fall in 2006 and 2007, meaning that average home prices in those markets have fallen beyond the recent lows seen in most other markets in the spring of 2009.” This may make buyers complacent, expecting prices to go down further. And if you’re a seller, your immediate reaction might be to hide under the covers.

But all may not be so negative—in fact, quite the contrary. For one, Case-Shiller numbers, when they come out, have a lag time of several months—the aforementioned batch covers through October. Since then, a lot of positive things have happened. For one, strong consumer holiday-shopping showings boosted big retailers across the country, making it the best shopping season in years. A rising stock market and tax-cut extension has also made folks a little less nervous to open their wallets. And, while unemployment is still a problem, there is some good jobs news as well—initial jobless claims fell to 388,000 for the week ending Dec. 25, down from 422,000 in the prior week (the first time it’s gone below 400,000 since July 2008).

It’s because of reasons like this—increased consumer confidence and slight lessening of fear—that you shouldn’t count on home prices dropping more. Part of it is psychological: If people see the financial and retail markets go up, signaling that the bottom in this particular financial cycle has been reached and things are moving upward, that creates more interest in buying big-ticket items, like homes. It’s normal for a buyer to start rationalizing things this way: If the economy’s starting to improve, this house is going to wind up costing much more at some point. I’d better get in the door now, so I don’t miss the boat.

Yes, there are still plenty of problems. Not just rampant unemployment (despite initial jobless claims numbers), but also a high number of foreclosures, a crowded inventory landscape and mortgage rates that are anything but friendly. But these factors could, ironically, be a sign to buy. For instance, when interest rates go up uniformly over time as they have been, people develop a bite-the-bullet mentality, thinking: “I’d better buy now even though they’re high, because it doesn’t seem like they’re going down any time soon.”

This mentality—of getting in before things move up—is something to think about if you’ve been considering selling. Get your home prepared to sell by having a professional home inspection and fixing major problems that could be impediments to buyer interest. And for buyers: Buying a home is an individual process with many factors at play, so it’s impossible to say that it’s the ideal time for everyone to buy. But for many buyers, a simple saying may very well hold true: Get in while the getting’s good.

When searching for a home, you will come across many different types of properties in real estate listings. Homeowners who have gone into foreclosure or are trying to avoid going into foreclosure generate many of these listings. The main reason why many homeowners go into foreclosure is that they fall behind on their mortgages. Lenders foreclose on the home and try to get some of their money back. Different lenders are the main source for real estate listings.

Real estate listings are accessible through websites that deal with selling residential properties. The lists are also advertised in local newspapers and other local real estate publications. Below are the different types of properties you are going to comes across when you are looking at real estate listings.  Make sure you are prequalified for a home loan first and then get with a good real estate agent that knows the area you are looking to move.

Short Sales
To avoid foreclosure, many homeowners may opt to sell their homes at a loss. When they sell their home for a loss, the homeowners are choosing to go through with a short sale. Homeowners choose a short sale to prevent a foreclosure from showing up on a credit report. This option gives them a clean start. Various websites, newspapers and the homeowner’s realtor usually advertise short sales. Short sales may be a good option when buying investment property. The house is usually in fairly good condition. You can also inspect it before buying it. However, lenders must approve the terms of a short sale.

Bank-owned (REO)
A bank-owned property has gone through a foreclosure process. However, it did not sell at a courthouse auction. After an unsuccessful sale, the lender now officially owns the property. This type of property is also called a real estate owned (REO) property.

These properties are usually listed on lenders websites and through local realtors. They are usually sold “as is.” This means that it is unlikely the lender has made any improvements to a house after the foreclosure process. However, the lender would have taken care of any tax liens and unpaid debt. You can also inspect an REO before buying it.

Foreclosures
Lenders will often sell foreclosed properties at courthouse auctions to recover some of their money. At a courthouse auction, the public is invited to bid. The highest bidder is given the opportunity to buy the property. There are some risks to buying a foreclosure at a courthouse auction. First, you usually cannot inspect the property before buying it. Second, the home may have liens and unpaid debt that you may not be aware of unless you conduct a title search. Many states, counties and cities will have foreclosure listings on their websites.

Searching for a new home can be an overwhelming task. After you have found a house in the real estate listings, make sure to do your research to maximize your investment.