Housing Need-To-Know Info For Tricky Tmes

Existing home sales in the U.S. rose in May for a second straight month, but record foreclosures caused prices to drop by 2.4 percent, according to the National Association of Realtors.

On The Early Show Wendesday,Jill Schlesinger, editor at large of CBS MoneyWatch.com, observed that sales are being driven by low mortgage rates, the Federal Housing Tax Credit for First-Time Home Buyers, and an increase in motivated sellers, due to the number of foreclosed properties.

But what does this mean for home sellers and buyers, and those looking to refinance?

Schlesinger said sellers shouldn't snub any offers.

"You are no longer in a place where you can do this," she said.

Schlesinger added sellers should keep their home in good shape, and have information on comparable homes available for buyers. That way, she pointed out, you can tell potential buyers how much nicer your home is compared to another one in your neighborhood that sold for a particular price.

Sellers should also market to first-time home buyers, she told Early Show co-anchor Harry Smith, especially because of the home buyer credit. "That's where the action is," she said.

Schlesinger remarked that, if she were writing an ad, she would address it to first-time buyers -- or their parents.

As for buyers, Schlesinger said you need to know what you can afford. She said if 28 percent of your household income is what you can afford to pay, you can do it, but contributing a higher percentage -- "stretching to buy" -- isn't a good idea anymore.

Make sure owning a home makes sense for you, she advised.

"For some people, renting is still a good deal, and you don't have to reach to buy," she said. "Buying is not the American dream."

People who want to refinance, Schlesinger said, are getting into "messy" territory. She recommended "getting all your ducks in a row."

She recommended getting lots of offers, and said people looking to refinance shouldn't be surprised if the appraisal of your current property is really low.

"Still, it's a good time to get going," she said.

Of the 4.77 million homes sold in May, the National Association of Realtors reported, about a third of the sales were foreclosures and short sales, which pushed down prices. The median price of home sales was $173,000, according to the association, down 16.8 percent from a year ago.