Where are today's best real estate bargains?

The housing market is soft. Hard times for some can mean opportunity for others. Could now be a good time to step into the housing market and pick up a bargain?

Generally, it is a better time to be a buyer than a seller, but this is not so in every market. In San Francisco, for example, there are still more buyers than sellers for prime upper-end properties. You're not likely to pick up a bargain there.

Many more markets are suffering from too much inventory and too few buyers. These markets would seem to offer the best opportunities. However, this is not necessarily so. Even though the price you pay is relatively low, it could take some time before the value of your investment increases.

Anecdotal evidence suggests that the best housing investments are properties that are always in demand. These are well-planned and well-constructed homes in prime locations that appeal to a wide cross section of home buyers.

In a strong seller's market, virtually all listings sell if the inventory is low enough. For example, a small two-bedroom, one-bath home on a substandard lot in Rockridge, a trendy Oakland, Calif., neighborhood, might be snapped up quickly in a seller's market, and buyers feel an urgency to buy before prices rise further. In August, there was such a listing on the market in Rockridge. By mid-September, it had received no offers, even after a price reduction that would have triggered multiple offers in a stronger market.

HOUSE HUNTING TIP: Property that's not selling isn't necessarily a bargain if no one wants to buy it. A foreclosure that's selling for less than the defaulting owner paid for it isn't a bargain unless there is clearly upside potential.

A property in a good location that suffers from deferred maintenance could be a prime property in the future. That is, as long as it doesn't have incurable defects, like the two-bedroom, one-bath home on a small lot with no expansion potential mentioned above. These starter homes sell well in a hot market. The demand dries up quickly when the market slows because these homes don't satisfy most buyers' long-term needs.

Good candidates are properties that are located in areas close to urban centers with good transportation and where the population is growing faster than new homes in the area are being built. These locations could be the next hot spots when the market turns around.

Buyers have the luxury of being selective when there is a lot of inventory on the market. Before you waste time negotiating on a deal that can never come together on terms that you can accept, find out about the seller's situation.

Sellers who bought within the last few years may not be able to offer their property at a price that makes it a good deal for you. Many who bought in competition paid significantly more than the buyer who made the second to the best offer. In other words, they paid too much.

Also, many buyers who bought in a multiple-offer competition bought the property "as is" regarding deferred maintenance. To make matters worse, some of these buyers waived their right to inspect the property.

To avoid making this mistake, have any property you're seriously considering well inspected. And, keep in mind that a seller who paid a premium price for a property that he didn't inspect might not be willing or able to sell it to you at a price that's reasonable given current market conditions.

THE CLOSING: There are good buying opportunities in the current market for well-qualified buyers. Just make sure that you pick your bargains carefully.