Investors who time any market hope to buy at the nadir and sell at the zenith, but homebuyers have a trickier time knowing when to sit on the sidelines and when to jump in. The reason? There are several.

Buying a home is one of the largest financial investments a homebuyer will make. Transaction costs are expensive enough that homeowners remain in their homes approximately six years before trading up or down. As the recent buyers market shows, homes aren't liquid, and may not find buyers at the price and in the time frame that sellers prefer.

On the other hand, homeownership provides significant benefits including property rights, tax benefits and other government subsidies including support for a mortgage lending market, quality of life, appreciation, and equity.

Since two factors move markets -- fear and greed -- it's easy for buyers to be overanxious to buy in seller's market and reluctant in a buyer's market. In a seller's market, prices rise, sellers hold firm, inventories are short and days on market are short. In a buyer's market, buyers are fearful that home prices will either flatten or drop below what they paid, causing inventories to rise, days on market to increase, prices to drop, and sellers to sweeten deals.

If buyers pay attention to housing news, they can be discouraged: interest rates are near year-ago highs, builder confidence is down, and Realtors predict that housing will drop in value for the first time since 1968.

So is it the time to buy?

Here are a few factors to consider:

According to a recent article, "When the housing rebound comes" by George Mannes for Money Magazine, the time for buyers to jump in is when conditions improve. Mannes suggests that buyers look for four signposts: declining inventory (preferably under 6.5 months of inventory on hand); houses selling faster; Realtors opinions of local market conditions growing more favorable; and signs that sellers are less desperate, such as fewer incentives and homes selling closer to asking price.

For some buyers, the lesson that it's time to buy is a hard one. They may wait so long that the home they hoped would go down in price sells to someone else. They have to start their search over finding that the remaining homes don't compare to the "one that got away." They may wait for interest rates to drop, and find that they stubbornly stay at higher rates. They're knocked out of the neighborhood and price range they wanted to buy into and find themselves looking at homes with fewer features, less square footage, or more distance from work, family and friends.

When those scenarios happen, buyers learn that there's an opportunity cost for waiting.

If you're a buyer, you sadly realize that to get the home you want -- at both the price and interest rate you want -- will be nearly impossible. If you're lucky, you'll get two out of three. So, if you're waiting to see what other buyers are going to do, you'll soon find that once buyers move collectively, they will either drive prices down or drive them up. If prices are down, but likely to recover, do you really want to compete with other buyers on the way back up?

In other words, the price of feeling more comfortable about buying is inevitably paying higher prices and having less to choose from.

So here are some surefire ways to tell that it's really time to buy:

1. You found the home you really want

2. It's affordable

3. You can get a reasonable loan

4. It will serve you and your family for years to come.

5. You're not looking for perfection. No home is perfect.

6. You've given up trying to beat the market.

7. You're comfortable with your compromises, whether it's location, size, price, features, or condition.

8. You're confident the home you chose is desirable enough that you will be able to sell it in any market.

Published: June 21, 2007

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Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.