Handing over house keys
 Photo: © 2009 Jupiterimages Corporation
The real estate market is under heavy scrutiny right now from both sides of the line. People who eventually want to own a home—it's the American dream, after all—are wondering if now's the time to make that leap, particularly with the first-time homebuyer's credit up for grabs until April 30. Homeowners who want to sell are wondering what price and features are going to give their house the push it needs.

The fact is, it's a tricky market to navigate, no matter what side you're on. Here, some tips for making the best of the situation.

If you're a potential buyer:

Hone in on your needs. There are a lot of deals out there, that's for sure. But the trick here is to keep from getting sucked into a home simply because it's on sale. Before you start shopping, sit down and make a list. "Jot down what you really need, so you have a checklist that shows your needs versus your wants," says Peter A. Schkeeper, one of the authors of The Smart Consumer's Guide to Home Buying. Take that list with you to each home, and make sure you're not compromising—there are plenty of houses out there, so you can afford to be a bit picky. It might help to bring a camera along so you can snap shots of anything that you really love or things you're not so sure about it. Your memory may not serve you as well as you'd hoped later on, and a photograph will tell you if that pea green carpeting was really as bad as it seemed.

Focus on the location. You have to love the house. But the location is just as important (if not more—particularly when it comes time to sell, location is going to be a huge factor). "Buying a house is a romantic journey. When you're young, your mother tells you to date more than one person, make sure you meet the family. When it comes to a home, it's the same thing. The economy may be improving, and the value of that particular home may be terrific, but if the area is under a lot of economic stress, the location can be detrimental," Schkeeper says. So do your research. That means talking to people in the neighborhood, spending a little time there, going around to businesses to see if they're thriving and reading the local newspapers. The Internet is, of course, a great resource as well.

Be wary of new construction. That doesn't mean that all new developments or condos are bad news. But some certainly are. "There are issues right now with developers who are only marginally capitalized. In the housing crisis, they got caught with their pants down, and the development isn't anywhere finished. People who bought in are left with a new home, but a developer who can't stand behind the warranty or unfinished streets," says Ilyce Glink, author of 100 Questions Every First-Time Home Buyer Should Ask, now in its third edition. The takeaway? Be cautions about buying into a development or condo that isn't at least 70 percent sold, says Glink, and do your due diligence to find out who the developer is, the company's history and whether the project is in good shape financially.

Selling your home takes extra effort