Don't forget that as soon as you have a signed contract accepted, get a copy of the executed purchase agreement to your lender! You may be pre-approved, but your lender needs an executed contract and preliminary title report to start the final approval process! If you delay providing the lender needed info, then you may not be able to fulfill the terms of your purchase agreement on time and lose the house!

Most of the REOs I've entered have about the same overall amenities — nasty/dirty carpet, holes in doors, slashed kitchen cabinets, closet doors stacked in a corner, and the forced air intake caked solid with dust bunny sculptures. However, to date, the most specialist strange thing encountered in an REO is in what my client and I have dubbed the "drug house."

It's an ordinary suburban neighborhood. The kitchen is actually functional. The carpet isn't too nasty. Our spirits improved after walking around the front. And then we entered a guest bedroom.

As usual, the closet doors are off. The carpet is gone with tack strips circling the concrete slab. The closet is missing a sheetrocked side and the other bedroom is visible through the hole. Embedded in the ceiling are industrial strength hooks, about five across in two rows. Half buried in the closet floor is a safe—-closed, combo facing upward. Someone obviously tried to take it with them but the jack hammering just wasn't quite sufficient. About 10 inches is sticking up from the foundation….the rest is still stuck.

There's a loose 220V outlet about 4 feet off the ground.

For some reason I don't think this one is going to pass FHA appraisal.

Based off recent market analysis, current market rates are similar to the values in 2002. Features of the home and area you're located in will factor in, but my overall assessment is current Bay Area values are in the 2002 range.

People are concerned if they should sell now while they still have equity in their house. It might be a good option to consider if you have a sound reason to move — upcoming relocation, job transfer, enlarging family, downsizing income. If you would probably sell the house regardless of the economy, putting it on the market now to hit the peak buying/selling season might be a better plan than waiting until fall or winter. Who knows how the economy will factor in nine months from now? Yes, values may fall further. Or, they could rise. It will take longer to sell your home this year, unless you want to significantly price it under the market and liquidate. Either way, budget extra time to avoid a financial crunch.

If you are thinking to dump the house because your investment isn't paying off how you hoped, remember real estate traditionally will pay off over an extended time. If you've been in the industry for 30 years, you will remember other times when values dropped or interest rates peaked. Values being down this year doesn't mean they'll be down five years from now. If you can afford your mortgage and the home meets your needs, I recommend keep the house and over time you should see it pay off.

I want to buy my first house. Where do I start? I would like a low or zero down loan, but should I wait to save up for a good down payment? Do I find the loan first, real estate agent, or house first?

It's difficult to get any loan with less than 3.5% down right now. You'll also need to budget for closing costs, roughly another 3%. If you are tight on money now and don't have cash reserves, you should first spend some time gathering data and a savings account.

FHA is the most likely program for you as a first-time buyer with little down. Contact Countrywide or another FHA approved lender first and find out what you need to do to prepare to qualify for a loan, and how much house you can afford to buy. Until you have the pieces together, there's no reason to contact an agent and fall in love with a house you can't afford. You can monitor prices online and drive by neighborhoods to get a feel for where you'd like to buy. When you have the appropriate funds and have a budget in place, then hire an agent when your finances are ready. You might find the house you want within days….or it may take months.

When I was a first-time buyer, I spent six to nine months watching the market (and seeing prices rise) while saving and getting the down payment together. It may take time but when you have your ducks in a row, then it's just a matter of finding a good house — then you don't have to stress over losing it because you're not ready to buy yet.