How to See Through a Realtor's Pitch

What’s the best time to buy a home?

Your real estate agent probably has a ready answer: now. It’s the same answer you’d have heard a year ago, two years ago or five years ago. It’s the same answer you’ll get a year from now.

Because the agent gets paid only when a home sale closes, there’s little incentive to discourage anyone from buying at any time, regardless of market conditions.

When home prices were peaking a few years ago, the same agent might have urged you to buy before homes got even more expensive. Many buyers swayed by that pitch are regretting it now that their homes are worth far less than they’d paid.

So it’s best to be armed against the standard buy-now arguments.

Traditionally, most agents’ sales pitches were based on an article of faith: that home prices always go up, so that any home purchase would make money over time. That was never completely true, as there have always been some neighborhoods where prices fell. But the recent collapse in home prices nationwide should put that argument to rest. Many homes, perhaps most, will appreciate given enough time, but that’s not guaranteed.

If an agent presses this argument, point out that it’s hard to imagine home prices rising very much anytime soon when growing numbers of foreclosures are boosting home supplies and rising unemployment is cutting demand.

Right now, your agent is also likely to argue that mortgage rates are too low to pass up, and could rise. Rates are indeed very low, with the average 30-year fixed-rate mortgage charging just more than 5%, according to the BankingMyWay.com survey. Given long-term patterns, it seems very unlikely that rates could fall much further, though you might beat the average with the search tool.

Note that some of the best market-beating deals come from small local and regional banks and credit unions. First Niagara Bank of Washington, Pa., for example, offers a 30-year fixed-rate loan at 4.875%, while Bank of America (Stock Quote: BAC) charges 5% and PNC Bank (Stock Quote: PNC) asks 5.25%.

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