The Real Estate Deal

Most of all, it makes sense to take advantage of the buyer's market. The supply and demand math is simple -- you'll find good deals and will have plenty of time to decide.

I suggest the following if you're a buyer:

• All markets have good deals.

  Even if you're in one of the more expensive coastal or big-city markets, there's always a good deal. Pockets of value -- neighborhoods that didn't go nuts with the rest -- can usually be found in all areas. And there's always someone needing to sell. If you work with local realtors and banks, you'll find out who they are.

• If you can't find a deal, don't buy.

  Be patient and sit tight. There are plenty of choices. None move so fast you need to do something foolish. Renting for a while might even pay off. Remember, as with any investment, a conscious "no" decision can be a good decision.

• Run the numbers.

  Get the facts and latest trends for your area. There are many ways; one I like is Housingtracker for up-to-date home price and inventory trends for major metro areas. It's like the value approach to stock investing -- look for fundamentals, growth and price.

• Get your perks.

  In this kind of market, it's easy to find good deals. But don't stop there -- most sellers are prepared to add incentives to the pot. Take advantage, and if there's something you want, don't be afraid to ask.

And if you're an investor:

• Look outside your area.

  Many markets in the Midwest and South are poised for price growth in the 4% to 7% range. Good homes in Houston, Dallas, Kansas City or Wichita can be found for $75 per square foot in areas of healthy employment. Again, Housingtracker can help pinpoint values, and you might hook up with a service specializing in out-of-state investments such as the NorthPoint Group.

• Invest, don't speculate.

  "Flipping" is a thing of the past. Single-digit annual returns require investing right and holding on. Get used to it. Leveraged through the mortgage, single-digit growth can bring double-digit returns, and if rents bring single-digit growth too, that's a plus. Again, be patient.

• Be prepared to add value.

  The best long-term real estate returns happen when you add some value, anything from additional square footage to a whole new look. It's better still if you live in the home while remodeling. You'll get lower mortgage rates, and after two years, no capital gains taxes (up to $500,000 in gains for a married couple), and likely a stronger market.

So -- long and short -- I see plenty of opportunity in real estate in this year. And just like in the rest of real life, those who do the work will be rewarded.