Question: Will home prices keep dropping? Is this a good time to buy?

Answer: Real estate is a localized commodity so you have to ask: Will home prices keep dropping in my neighborhood, if they have dropped at all?

I don't know the answer to this question because it involves a look into the future. I might speculate regarding given neighborhoods and areas. I might consider local population growth, whether or not the area job base is expanding and whether new home construction is keeping pace with demand, but regardless of which tea leaves I consider at the end of the day -- just like economists, stock analysts and bookies -- I can't know for sure. And, despite claims to the contrary, neither does anyone else.

Question: I want to buy a home in Southern California. The price of homes has dropped quite a bit. My question is: Will home prices keep dropping? Is this a good time to buy or should I wait? Please advise.

Answer: See above. Alas, I wish I could do better.

Many people have bought property and watched prices rise, the usual example of a "good time to buy." But to me the idea of a "good time to buy" is an elastic concept -- I'm not only interested in prices, I'm also interested in such factors as mortgage rates, rental demand, maintenance costs, cash requirements, and whether I intend to be an owner-occupant, an investor, a short-term owner or someone who holds for the long-term.

As an example, long ago a grandparent bought a home for $8,000. The Depression hit and the value of the property dropped to $4,000. Much anguish ensued. Today the property -- now owned by others -- is worth $800,000. You would rather have bought at $4,000 -- but buying at $8,000 was not so terrible either if you keep the property long enough.

Given today's prices and interest rates now could be a great time to buy in certain markets when compared with recent times. Unfortunately, the real answer won't be known for several years.

Question: We have a contract for a new home due to close in September. We have been given a $10,000 credit for closing costs if we use the builder's lender. They have asked us for $350 to conduct an appraisal. Of course, we expect the appraisal to meet the purchase price. What happens if we obtain an independent appraisal and it's 10 percent or more below the purchase price? Do we have any room to ask for the price to be reduced or are we obligated to pay the purchase price regardless of the appraisal?

Answer: You have a contract with a builder. You are obligated to complete the agreement unless both parties agree to a change.

Let's say that the value of the property rose 10 percent according to your independent appraisal. Would you then go back to the builder and demand that he accept a higher price?

The purpose of an appraisal is to assure the lender that the property has sufficient value to justify a loan of a given size. The lender will select the appraiser to be certain that the work is done by someone it regards as both trustworthy and accurate. The buyer will pay the cost of this service.

The bigger issue is not the appraisal, it is the question of how financing from the "builder's lender" measures up. Did you shop around for a mortgage before agreeing to use a lender named by the builder? Did you also shop for closing costs?

Question: I'm currently serving a tour in Iraq and am wondering what the stipulations are for being approved for a VA loan. My wife is stateside now and we are interested in buying a home. What do I need to do to see if I am eligible for the VA?

Answer: We appreciate your service and thank you for writing.

The VA says that for Active Duty Service Personnel "if you are now on regular duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service."

To obtain a VA-insured loan you will need a "Certificate of Eligibility." Generally a lender can obtain this for you, however there may be situations where you will have to apply directly for this certificate using VA Form 26-1880, a Request for a Certificate of Eligibility for VA Home Loan Benefits.

Because rates can differ you will want to speak with various lenders. Also, be sure you have all certificates and approvals in place before you go house hunting -- this will prevent possible contractual and settlement delays and problems. A base housing officer can provide additional information or you can call the VA in the US at: 1-800-827-1000.

Question: We sold our primary residence and it closed five days ago. We're still waiting for the proceeds from our relocation company. We're nervous because we have a purchase scheduled to close in 10 days.

What right does the relocation company have to hold onto the funds while telling us they are trying to get the disbursement approved and through channels?

Answer: A relocation company in your situation is simply a buyer. It agreed to purchase your property under certain terms and conditions. Unless there's a written agreement to the contrary, the usual and standard procedure is to pay the seller at closing (a "wet" settlement) or to pay within a few days when title is recorded at the local records office (a "dry" settlement).

Contact the closing agent and ask about your payment. If the payment is not forthcoming, speak with a local real estate attorney. Ask if there are any state-mandated requirements in your jurisdiction requiring a release of funds -- in some jurisdictions the cash must be available within a day or two of closing.

Question: A broker publicized a house that was supposedly for sale, but when I expressed an interest in it, I found out that the broker does not have a listing agreement, has never talked to or met the owner and even has as low ball price on the house that it would never sell for. Is this some kind of "bait and switch" and is it even okay to do this sort of thing?

Answer: Imagine that a broker belongs to an MLS and has a web site which displays local listings. In this case you have a broker who does not have a listing and yet is "publicizing" a property where may never have met the owner or actually seen the house. As to the price, it could be posted in error or just changed. In this situation the broker has an obligation to update the price, but otherwise would be acting in a usual and appropriate manner.

But let's say a home is not for sale with any broker and yet Broker Smith claims that it's listed for sale. Smith now has an interesting problem: What if someone wants to buy the property? Smith has no authority to offer it for sale. What if the owner wants more? Many states say in their regulations that a broker can only offer a home for sale on the basis of the price which has been approved by the owner.

Or, what if the property was for sale, the listing just lapsed, and broker Smith has not instantly updated his web site? Such things happen.

In your situation you should ask the broker how he or she is able to represent the property. If you are not satisfied with the answer, then contact your state or provincial real estate regulator and discuss the matter with them. A list of regulators with contact information can be found at ARELLO.com.

Question: I'm from New Zealand and have an interest in buying property in the U.S.

I have spoken to a U.S. property management company and been advised that it is not acceptable in the States to obtain a Bond or Cheque from a tenant for damage or security.

In NZ we have the DPH Department of Building and Housing that provides a Tenancy tribunal and mediation if needed for an admin fee of $200nz.

The tenant has to pay a bond of up to four weeks rent as a security, this bond held by the DPH and refunded at the end of the tenancy if there are no damages.

How does the system work in the US?

Answer: Typically in the US the tenant provides a deposit equal to the rent for a month or two. At the end of the tenancy the property is examined to assure that no damage, other than normal wear and tear, has occurred and that all rent has been paid in full. If there are no claims, or if the claims are less than the deposit amount, then any funds remaining in the tenant's account are refunded.

You need to use great care with tenant funds in the US. In some jurisdictions money from tenant deposits must be held in an "escrow" or trust account and not co-mingled with owner funds. Using tenant money when not authorized is a serious matter and can result in stiff penalties.

We do not have the mandatory landlord/tenant arbitration system such as you describe, but owners and tenants have the option of arbitration if they elect.

Have a real estate question? Send your inquiry to Ask Realty Times. Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here. For past columns, please press Ask Realty Times.

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Published: June 6, 2008

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Have a real estate question for Realty Times? Wondering about buying, selling, financing, refinancing or renting? Here's where you can send your question to Peter G. Miller, OurBroker®, a nationally-known columnist, author and reporter. Peter G. Miller has written six books -- including The Common-Sense Mortgage -- a guide with hundreds of thousands of copies in print. Miller was the original creator and host of America Online's Real Estate Center and joined Realty Times in 1998. Send your questions to . Because of the volume of mail received, individual questions cannot be answered privately and not all questions can be used. Published letters may be edited for space and style and all letters become the property of Realty Times upon receipt.