How to Make the Buyer's Market Work for You

Dear Ali;
I'm a first-time buyer, and now I hear everyone say that it's a "buyer's market." What are the best ways to make that work for me?
A: You make a buyer's market work for you by remembering one thing: You don't buy a market, you buy a house. (Or an apartment, but you know what I mean.) You are not concerned with the condition of the forest here, because you only need one tree.

Tip #1: This is not a prescription but a warning: Don't fall in love with just one property! If you do, than it doesn't matter how much of a buyer's market it is, you've given up your advantage and made it a seller's transaction. Remember as you're shopping to pick out two or even more properties that you like, so you'll always have a backup. If you get tangled up in one and the price starts to get high, you'll have something to switch your attention to.

Tip #2: Pay attention to the first-time homebuyer credit. Even though it phases out at an income level of $75,000 of adjusted gross income per individual or $150,000 per couple, it's still a great deal for those who qualify.

Tip #3: I've said this before, but it's important, so listen: Do not pay too much attention to the other guy's asking price. I keep seeing people on the real estate boards talk about a property that's gone from $500,000 to $400,000 as being at a 20 percent "discount." Well, that's true only if the property was really once worth $500,000 -- but if it's really worth $300,000, you've been snookered. The only way to tell how a property should be priced is to look at other comparaable sales and listing prices. You have to read your own data.