When real estate sales are slow, and there is a glut of homes for sale, buyers have an opportunity to pick up a house on the cheap. The operative word here is "opportunity". There are times when you should pounce and times when you should show restraint and avoid the impulse buy. Knowing the difference could save you thousands of dollars.

Tip No.1 - Do your Homework

Buyers generally have the advantage in a down market, but this doesn't mean you should walk into a transaction blindly. Prospective buyers would be wise to search the internet for listings, inquire with a Realtor or real estate agent and also check the local newspapers to gain insight on a particular area.

The objective of this research is to get to know the price range for the area. You want to learn what is considered excessive and what is considered low. This research will help you make a reasonable bid and also provide the first inkling that there is bargaining room on a particular home.

Tip No.2 - Get Those Ducks in a Row

Remember, you are probably not the only bargain hunter out there. You may have an edge on the sellers, but another buyer could snap up your great deal if you delay the buying process. To make sure that you're able to pounce on a deal at a moment's notice, it makes sense to get pre-approved for a mortgage and to have an attorney on retainer to handle the closing paperwork.

It also makes sense to line up a home inspector and an insurance agent. These professionals provide valuable information and let a buyer know early on in the process, during the attorney review period, what items might need repair as well as what the home will cost to insure.

Tip No.3 - Watch For Motivated Sellers

Some homeowners may want to sell their homes and just "get out of Dodge". This gives you additional bargaining power. In a situation like this it makes sense to ask if the seller will throw in the lawnmower, furniture or fixtures that you like. You can also ask the seller to cover closing costs in total or in part. Of course, the listing price is always negotiable as well.

Here are a couple of signs that the seller is motivated:

• The home may have been on the market for several months and undergone several price reductions.

• At the showing the home is empty, which suggests the seller has moved and may be holding two mortgages.

It's very difficult to determine exactly how much leverage you have in any given situation - after all, there are many reasons why someone could be selling. However, your agent can give you a general idea of the sellers motivation. An agent has access to the Multiple Listing Service and can track down the original list price versus the selling price for similar homes in the area. The agent can also find out how long the house has been on the market and any price reductions that have occurred.

Many states make deed records and home-sale information available to the general public on the internet. This information will tell you what the seller paid for the home, which, in turn, tells you how much profit the seller stands to make if he or she got the asking price.

Tip No.4 - Negotiate With The Realtor

When houses are selling at a slow pace, many Realtors are also struggling. In such an environment both agents and firms may be more inclined to knock a percentage point or two off of their commission schedule to get a deal done.

But isn't it the seller's job to pay the Realtor? Why should you care what the commission is?

Commission is important to the buyer because the seller probably listed the home at a high price so he or she could pay the commission to the Realtor and still walk away with a nice profit. Buyers can get their real estate agent to ask the listing Realtor to lower their commission so that the deal gets done, and the seller and the Realtor both walk away with a decent profit.

The Consumerist.com offers these tips for increasing your leverage when negotiating with a Realtor:

• You may be able to get a discount by using the same Realtor to sell your current house and buy a new one.

• Smaller real estate firms may be able to approve lower commission rates more quickly, because they have fewer layers of bureaucracy.

• If one agent won't negotiate, find another that will.

• Consider using the internet instead of a Realtor. There are services available online that give house hunters direct access to the Multiple Listing Service, allowing them to find potential properties themselves.

Tip No.5 - Make Sure You Have Clear Title

During trying economic times, sellers may be looking to unload their homes because they are in over their heads. In some cases the property itself may be encumbered by a lien from a contractor, service provider, bank or other lending institution.

For this reason it always makes sense to use a title insurance company and to have a lawyer do a title search to make sure that there are no liens and the property can be transferred without the risk. The last thing you want is to have to absorb any of those liabilities. Note: Lenders typically require title insurance and a title search if a mortgage is going to be taken out on the home; however, cash buyers should use these services as well.

For more information about title insurance, you should speak to your insurance representative. The web also contains a wealth of information on the subject, and many states, or the insurance commissioner of the state, have a website that discusses the reasons for and the typical types of such policies.

Bonus Tip - Avoid a Bidding War

When you are shopping in a down market the last thing you want to do is let your emotions get the best of you. A bidding war is almost always an unnecessary waste of time and, in the end, money. Down markets are all about getting a really good deal, so to fritter away that possibility because of ego, or the desire to simply win a bidding war, is foolish. The best advice for avoiding a bidding war is to set a price limit and stick to it. Remember, there are plenty of homes out there and other deals to be had.

Bottom Line

Prospective buyers have an edge in a down market, but this doesn't mean they are guaranteed to make money on the properties they buy. Ask yourself some hard questions about why you are buying the home. A quick flip may not be possible in a prolonged down market, and so you should be prepared to live in the new home, or at least or hold on to it for an extended period of time. Being prepared and organized and relying on trained professionals for guidance can help you get a great deal in a struggling real estate market.

Glenn Curtis started his career as an equity analyst at Cantone Research, a New Jersey-based regional brokerage firm. He has since worked as an equity analyst and a financial writer at a number of print/web publications and brokerage firms including Registered Representative Magazine, Advanced Trading Magazine, Worldlyinvestor.com, RealMoney.com, TheStreet.com and Prudential Securities. Curtis has also held Series 6,7,24 and 63 securities licenses.

In Pictures: 7 Tips For Buying A Home In A Down Market