Johnathan Smith

It's not always enough to be up to snuff on negotiating that reduced price. Sometimes you need to know where to look to find a bargain that's already available.

Redfin's "Science of Real Estate" center studied the differences between homes that sold for a large discount and those that didn't, and came up with guidance for buyers looking for large discounts.

"Homebuyers have begun crawling out of their bomb shelters hungry for big discounts off the asking price," said Redfin CEO Glenn Kelman.

"Often, their expectations are unrealistic, as many sellers have already aggressively priced their homes. But when conditions are right, we've found that a small but significant number of sellers concede $50,000 or more at the negotiating table. We've tried to take the mystery out of when a seller will give ground and when she'll stand firm," Kelman said.

The recommendations aren't negotiating tips but "where-to-look-for-bargains" tips.

Redfin says:

Look for languishing listings. Heavily discounted homes are 83 percent more likely to have been on the market for 90 days or more. Most sellers will hesitate to accept a low offer if the property has been on the market for only a few weeks.

Find fixer-uppers. Heavily discounted homes are 73 percent more likely to need some fixing up. People who sell homes before fixing them up are usually more concerned about speedy selling than peak price. Get the home inspected before you buy so you know exactly what needs work.

Retreat from remodels. Heavily discounted homes are 20 percent less likely to feature a noteworthy remodel. This also means sellers who sink money into major remodels before they list could be missing out on certain buyers.

Pick properties with pared prices. Homes that are already heavily discounted are 28 percent more likely to already have price reductions. Duh.

Hunt homes with long-time owners. Heavily discounted homes are 52 percent more likely to have been seller-owned for 20 years or more. The longer a seller has owned a property, the more equity he has likely accumulated, and the more likely he is to make significant price concessions.

Put your finger on a flip. On the other hand, heavily discounted homes are 9 percent more likely to have been owned for less than five years. A home owner or investor in trouble may be motivated by the need to quickly reclaim capital, rather than wait for equity growth.

Don't bank on bigger bargains from bank-owned homes. Heavily discounted homes are 9 percent more likely to be a short sale or bank-owned. Banks lower prices as much as possible from the beginning to unload distressed properties as quickly as possible, but no so much to take more of a loss than is necessary.

The Dow Jones industrial average rose more than 200 points yesterday morning -- after declines in oil prices were reported. That gain was short-lived, as the DOW closed down 26.63 points.

Oil prices have been shown to have lingering effects on the housing market. Former head of the Economic Forecasting Center at Georgia State University, Donald Ratajcza, noted in a 2005 investing article, "Ultimately, rising energy prices are going to affect not only how we drive, but also where we build and how we consume energy in our businesses."

He couldn't have been more right. As oil prices have risen, commuters and homeowners have searched for alternate ways and places to live.

Though the dollar seems to have rebounded slighting in recent weeks, the New York Times reports, "Commodities prices fell across the board, with corn, wheat, coffee and sugar all recording sharp declines. Gold, a traditional hedge against the dollar, was off 4.2 percent. Silver and cocoa were the worst performers, with both raw materials down about 8 percent."

Mortgage Volume Up 7.5%, Rates Down

The Mortgage Bankers Association reports a 7.5-percent increase in home loan demand during the week ended Aug. 29.

The index indicates a 10.5-percent jump in purchase applications and a more modest 2.1-percent rise in refinancing requests.

Additionally, the group's index tracking mortgages backed by the FHA surged 19.9 percent. Refi demand accounted for 34 percent of all application volume and adjustable-rate loans accounted for 6.6 percent--versus 35.2 percent and 7.9 percent, respectively, the prior week.

The report also shows a drop in the 30-year fixed mortgage rate to 6.39 percent from 6.44 percent and a decrease in the one-year adjustable mortgage rate to 7.11 percent from 7.15 percent, while the 15-year fixed rate edged up to 5.96 percent from 5.94 percent.

Where Are Lenders Getting Credit Scores?

Consumers often mistakenly believe that mortgage lenders use only credit scores from Equifax, Experian, TransUnion, and Fair Isaac's myfico.com to gauge creditworthiness.

However, Consumer Reports recently found that lenders also use NextGen FICO scores, FICO Expansion Scores, and Industry Option FICO scores - which take car loans into consideration - as well as custom formulas.

Given that these credit scores or scoring models are not available to consumers, experts say that consumers should not rely solely on available credit scores to determine their likelihood of getting a loan. They would be wise to make timely bill payments, make more than the minimum payment, hold down credit card balances, and retain old accounts.

Additionally, experts say it might be worth keeping tabls on other credit scores, such as Experian's PLUS scores, which are not yet sold to lenders but could be in the future.

The credit implications for a short sale are very different for those voluntarily selling their property and those forced into foreclosure. If the property owner voluntarily selling the property can pay off the amount owed out of pocket by using assets already owned there should be no credit implications. If the property owner needs to take a new loan from a bank in order to make up the difference from the short sale, then the credit implications would be the same as the credit implications of taking out any loan. In fact, sometimes taking out a loan can improve a credit rating. Whether the new loan raises a credit score or lowers a credit score, most likely the new credit score will not be drastically different than the property owner's credit score before the short sale.

However, if the short sale is due to foreclosure, the property owner's credit could be negatively and severely affected. Here is why. Say the homeowner owes $100,000 on the foreclosed property, but the lender only gets $70,000 from the sale. The lender can then sue the homeowner for the $30,000 difference. But, the homeowner won't have the $30,000. If he did, he most likely wouldn't have gone into foreclosure in the first place. If the lender chooses to sue, and the homeowner cannot pay, a deficiency judgment would appear on the homeowner's credit report, negatively affecting the homeowner's credit.

Often, the bank chooses not to sue, but to take the loss as a tax write-off. In this case, there would be no deficiency judgment on the homeowner's credit report; however, there is another implication. The $30,000 that the homeowner did not have to pay would be considered by the IRS to be income. The lender will send a 1099 to the homeowner at the end of the year, and the homeowner will be required to pay taxes on that $30,000. Even when the bank chooses not to sue, the foreclosure can end up showing up in credit checks because it is a public record.