Many homeowners evaluate the market and focus on "my house has depreciated $100,000 in the last year." This is a misleading mindset. The house is only worth what it can be sold for in the present market, and real estate is a commodity that fluctuates.

If you sell in a seller's market you also buy in a seller's market. Sell in a buyer's market, buy in a buyer's market. You trade apples for apples.

If Apple 1 costs $10, Apple 2 costs $10. If Apple 1 depreciates to $1, then Apple 2 is also $1. So you could sell your home for $900,000 last year and you downsized and purchased a $500,000 home. Maybe your house sells for $700,000 this year, but you can downsize to a $300,000 home. What is your net profit?

Every so often you can sell in a seller's market, rent a year or two, then buy in a buyer's market. Usually though, even if you sell and buy within a four- or six-month period, you will have a similar value baseline.

Despite the gloom and doom of the financial market, buying a home that you plan to live in for 5 to 10 years is not a bad idea if you meet the financial requirements.

Let's run some rough numbers: First-time buyers purchase a home for $400,000 with 20 percent down ($80,000). The loan amount is $320,000 (let's assume the buyer paid all the fees, costs, etc.). At a 6% interest rate your interest payment is around $1920 per month for a 30-year loan. Incorporating the cost of property tax ($400) and insurance ($70) your mortgage payment is $2390. If you are also paying principal on the loan, let's guestimate another $300. So your monthly mortgage is between $2390 and $2690.

While that's some serious change, and I'm not recommending anyone purchase a home they can't afford, let's look at the comparison. Say you rent the same home for $1700/month. Using the interest-only figure for the comparison ($2390), after 5 years:

Renting: $102,000 spent over 5 years
Owning: $143,400 spent over 5 years

So how likely is it that in those five years your home will go up in value $41,400? Yep, it's quite possible. Even probable. If you're handy around the house, you certainly can do a number of improvements yourself and gain sweat equity that benefits you even in a difficult market.

Yes, you put down $80,000. I'm not forgetting that. But it's unlikely you stuck that saved $41K in the bank while you were renting and "saving all that money." If you paid principal in addition to the interest, then you gain equity by paying against the balance of the loan. So at $300/month you've paid off $18,000 of your $320,000 loan.

Sure, you may own a home and drive an older car. But economically, borrowing to buy a house is money far better spent than borrowing to buy a new car. Fat chance that car will go up in value in five years.

Lenders are looking at communities and geographic areas to determine "depreciating markets." If you are buing in a depreciating market, the lender may be extremely cautious or refuse to loan on the property based on the loan-to-value ratio. Here's the catch-22: If it takes 30 to 45 days to get approval for a loan, your escrow period will be approx. 15 to 30 days more. Over a 60-day period it is possible your purchase in a depreciating market may depreciate below the contract sales price. Your lender may want to renegotiate the terms–the loan amount or sales price–before funding.

Having flexibility in your cash down is wise…and one way to offset this type of situation. More cash down drops the loan-to-value ratio. Alternately, proceed as far toward the approval process and get a fixed figure not to exceed in mind. If you can get approved for a $600K purchase, find a home under $600K to allow some wiggle-room.

It is customary that items permanently attached to the structure stay with the structure. Built-in appliances, wall-to-wall carpeting, blinds and attached lighting fixtures are usually considered “real property” and are sold with the house. “Personal property” applies to items that are not integral to the home, are not attached to the structure itself, and can be removed without significant alteration.

However, “attached” objects like storage sheds, garden ornaments, and even prized rose bushes outside the house are more likely to be thought of as personal property than real property. Freestanding items are very likely to be kept and removed by the sellers. If you are buying the home because of the beautiful the back yard water sculpture or garage storage cabinetry, make sure it's staying!

Some sellers will omit such items from the listing they plan to remove, and/or place a note on the items when the house is on the market indicating what will be removed. Decorative items in the garden, unsecured spa or shed, and custom drapes that match furniture could be “personal property” of the seller. If you have any doubt….include in the purchase contract the specific items that may fall into these “gray” areas.

Have you been on the receiving end of an unpleasant new-home surprise? Buy a home under the assumption that the back yard bird bath, 20×25' dining room "throw rug" or the custom drapes will be there when you move in…..and they're NOT!?!

Buyers, don't assume. The items are listed on the MLS are to be included with the sale. The safest way to avoid unwelcome surprises is to be specific in writing.

We’ve seen anything from antique glass door knobs, pool table lights, hoses & caddies, car tents, tool sheds, workbenches, dog runs, over-the-toilet cabinets, portable closet systems, and wall mirrors removed from sold homes by the sellers. Most of these items are not ever specifically mentioned in an MLS listing, flyer, or purchase contract. The seller may consider them “personal property” which can be removed.