Costly Mistakes Buyers Make
In a Down Housing Market

Here's a look at what's new in real-estate markets across the U.S. from around the Web. (Some links may require registration or subscriptions.)

Costly buyer mistakes in a down market

With plenty of homes on the market, prices falling and mortgage rates down, it appears to be a plum time for house hunters. But even in a buyer's market, buyers can make expensive goofs, writes Linda Stern of The Boston Globe.

Know your local market, Ms. Stern counsels. While there are bargains to be had, it's not smart to buy on the cheap if prices in your area are still falling. For instance, now might not be the time to make a purchase in Rust Belt cities like Cleveland and Rochester, N.Y., where more price corrections may be on the way. But buying a beach house now while buyers are looking to unload their properties before spring may be a good move, she says.

Buyers who fail to negotiate with their real-estate agent or look for deals are also making a mistake. Ms. Stern points to one brokerage in the Boston area that is giving buyers 75% of the commission it gets from home sellers. The catch: buyers must find the house on their own.

Sellers: Brace yourself for more bad news

For homeowners looking to sell their home, the forecast for the housing market is downright gloomy. Sellers should expect to see double-digit drops in home prices in most markets over the next three years, with an average decrease of 28%, according to a Fortune magazine report posted on CNNMoney.com. Declines are expected to be modest in "superstar cities," the Web site says: 14% in New York, 10% in San Francisco, 5% in Boston and 4% in Chicago.

In places like Detroit, where home prices are relatively inexpensive, and in areas like Dallas, Indianapolis and Cleveland that were passed over by the housing boom, prices should actually rise, the report says.

Downturn slams agents and medium builders

There's been much in the news about the toll the housing slump has taken on large, national home builders and consumers. But a recent article by London-based BBC News takes a look at two groups not focused on as much in current coverage of the downturn -- smaller builders and real-estate agents. The article touches upon the story of one Cleveland  real-estate agent, who during the housing boom, earned six figures yearly. Now, her income is down 70% and she may have to sell the house she inherited from her mother to boost her family's income, BBC News says. The article also highlights the experience of one Washington, D.C.-area builder who is using his life savings so he and his business partner can stay afloat. The money is enough to stave off bankruptcy for a year, the article says.

Vulture funds target builders

Real-estate vulture funds may make a killing from builders' pain, according to TheStreet.com reporter Nicholas Yulico. Among such funds is Starwood Land Ventures of Starwood Capital of Greenwich, Conn., which is looking to purchase distressed housing developments and land sites from builders at "40% to 50% of their 2005 peak values" and flip them a year from now, or maybe later, Mr. Yulico says. In the next three years, values of such land should return to 70% or 80% of peak market value, he says. Starwood is mostly looking at the previously "overheated" housing markets of California, Arizona, Las Vegas and Florida for deals. he says.

Ms. Kim is a senior editor at RealEstateJournal.com.

Join a reader discussion about the housing market.

Send links to articles about residential-real-estate markets to Lauren Kim at lauren.kim@wsj.com.

Email your comments to lauren.kim@wsj.com.