What are some of the advantages and disadvantages of purchasing a home in today's market?

As a potential first time home buyer, I am curious about the risks and benefits of purchasing a home with the current economy crisis. What about homes that have been foreclosed on versus new homes or homes that are being sold by owner or agent?

The advantage is that you're buying a home in 2008 at 2003 prices. And, interest rates are still near historically low levels. Plus, it's a buyer's market. So, a seller (even a bank selling a foreclosure) might be willing to bend over backwards for you to sell the property.

If you wait because you think prices will go lower, keep in mind that there are a lot of people out there who are doing the same thing. And, once word spreads through the market that prices are as low as they're going to go, people finally decide to pull the trigger all at the same time and prices go up as people get into bidding wars over the more desirable properties.

Also, no one really knows what's going to happen with interest rates over the next year or two (some people are speculating that the economic stimulus packages and corporate bail-outs will cause inflation in the economy, which will send up interest rates). If you buy now, you'll lock in a low rate. And, I seriously doubt they'll go any lower.

When looking at foreclosures, one thing to keep in mind is that the bank does not have to submit a transfer disclosure statement (TDS) as the seller. In a non-foreclosure sale, the seller has to submit a TDS, which describes the condition of the property in detail, to the best of the seller's knowledge. If some discrepancy with the property isn't included on the TDS and the buyer discovers it after the sale goes through, he can sue the seller and his agent for damages.

With a foreclosure, the seller is on his own to determine the condition of the property. This can be difficult to do for things like cracked slabs or foundations, code violations, unpermitted improvements, or even the knowledge that the next door neighbor plans to add a second story, which will block your existing view.

Also, secure a real estate agent to represent you as the buyer. The agent is paid for by the seller (and they keep the money if you don't hire one). You have everything to gain with professional representation, and nothing to lose.