PersonalFinance: Bargain-shopping for a house

(Linda Stern is a freelance writer. Any opinions in the column are solely those of Ms. Stern. You can e-mail her at lindastern@aol.com.)

By Linda Stern

WASHINGTON, Oct 17 (Reuters) - Mortgage rates are down. House prices are down. Fed chairman Ben Bernanke is waxing eloquent about the prolonged deep housing slump. Sounds like a good time to go house shopping!

"This is a great time if you're a buyer," says Joe Fox, who operates real estate Web sites aimed at sellers and buyers. "You completely low-ball it." Panicky builders are giving "incentives" on new houses that can run into the tens of thousands of dollars in kitchen upgrades or furnishings like flat-screen televisions. Motivated sellers are chipping in closing costs and dropping prices.

"It's an amazing market," says Jason Salzenstein, a publications director who has been house shopping in Boston. "We're looking at places that we looked at two years ago, and they are $200,000 less now than they were then."

Salzenstein, by his admission, is taking his own sweet time to make sure he does his house hunt right. That means he's waiting for the right house at the right price, and he's using new market tools to secure a competitive and safe mortgage.

Even in a buyers' market, buyers can make expensive mistakes. There are some new tools and techniques that can help ensure you make a good deal and not a damaging one.

Here are some ways to go about your search.

-- Know your market. Picking up a bargain in a solid real estate market like Boston is one thing; buying cheap in a market where the economy is ailing is quite another. Overbuilt condominiums still might have farther to fall, as might home prices in some slumping Rust Belt cities like Rochester, New York, and Cleveland. Those newly developed exurbs -- expensive tanks of gas away from metropolitan areas -- might still be a risky buy. One place to pick up deals, especially in the fall, is in summer beach resorts from New England down to North Carolina, where buyers may not want to wait until spring to unload their property.