January buying advice (© Corbis)

The housing market may seem like a cold, bleak place this January, with a looming inventory of foreclosures and a pall of uncertainty hanging over many markets. In this installment of Buying Advice, we'll tell buyers how to use this situation to their advantage and beat out their competition for bank-owned bargains. We'll also point you in the direction of some appealing warm-weather markets with bright prospects, and shine a light on what it takes to recover from a short sale. (Bing: What is a short sale?)

The right way to bid on a foreclosure
During this wintry month, you'll probably find that most of what's on the market is bank-owned or a short sale. (Who would want to sell right now unless they had to?)

These distressed properties can be a real bargain, if you and your agent handle it correctly, says Kim Drusch, an agent with Century 21 Award in Escondido, Calif., who represents both buyers and banks in property sales.

Unfortunately, she says, many agents drop the ball when making an offer, and lose the deal for their clients.

"The offers are written so poorly that the letter is rejected" by the bank, Drusch says. That's a problem when you have 10 offers on a "screaming deal" of a house, she says.  And that may be why you have lost out on bids that you thought were in the bag. Here are some of the most common mistakes when bidding on REO, or bank-owned, properties.

1. Missing or incorrect deposit check
The bank wants to see a deposit check that is dated on the day of the offer, not a check that has been used for three different offers.

2. Bad bank statement
Again, the lender wants to see a recent bank statement — as in the last 30 days — with the bidder's name on it and enough money to qualify their purchase. The account number can be blacked out, Drusch says.

3. Missing letter from the bidder's lender
Asset managers for REOs want to know, Drusch says, that she has talked to a bidder's lender to verify FICO score, employment, funds and the bidder's ability to close in 30 days. That should all be confirmed in a lender letter.

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Moreover, she says, buyers should be realistic about their expectations when dealing with a bank, rather than a typical seller.

While most traditional sellers will pay for certain inspections or minor repairs, most bank asset managers won't, she says. That's the bidder's responsibility. However, a good agent should ask for any reports done in previous inspections, she says.

But please don't neglect inspection, Drusch cautions. Vacant properties carry more risk of unseen problems, from mold to faulty plumbing to wiring damage caused by irate former owners.

Retirement hot spots
With Florida and Arizona home markets still tanking, where should warm-weather seekers turn for their retirement home?

Some of the best spots for investment these days are in the South, says Local Market Monitor President Ingo Winzer.

What's your home worth?

"There are many areas with a good outlook for home prices, a large university or universities and good access to health care," he said.

LMM selected its top warm-weather picks for retirees, ranked by their home-price outlook and size — populations between 200,000 and 600,000 — amenities, stable employment and quality medical facilities. Keep in mind, these are not markets expected to boom in coming years, just to appreciate steadily, therefore providing a haven for investment. (Bing: What's the home-price outlook in your area?)

1. Durham/Chapel Hill, N.C.
Home to Duke University and the Research Triangle, this market may be stagnant now, but it has a bright outlook over the next couple of years. By 2013, the third-quarter average home price of $232,500 is expected to rise 6.6%.

2. Augusta/Richmond County, Ga.
This beautiful city along the Savannah River is home to Augusta State University, the Medical College of Georgia and University Hospital. Its average home price of $179,600 is expected to rise 6.2% by the end of 2013.

3. Las Cruces, N.M.
The only Western market to make the list, this city thrives due to its large base of government employment. While home prices have declined here, as they have in most other cities on our list, it's poised for a strong comeback, Winzer says. The average home price of $162,200 is expected to rise 5.9% by fourth-quarter 2013.

4. Charleston-North Charleston-Summerville, S.C.
Southern hospitality and beautiful downtown architecture are draws to this town, which boasts stable employment, as well as the Citadel and the Medical University of South Carolina. The average home price of $256,300 is expected to rise 5.5% by the end of 2013.

5. Nashville, Tenn., and surrounding suburbs
There's no lack of things to do in this hub for health care, music and banking. Vanderbilt University, Tennessee State University and a strong performing-arts center provide plenty for locals to do. The average home price of $200,000 is expected to rise 2.6% by the end of 2013.

Rounding out the top 10 were: Hickory-Lenoir-Morganton, N.C.; Athens, Ga.; Columbia, S.C.; Wilmington, N.C.; and Bowling Green, Ky.

When can I get back into homeownership?
We've received many questions from readers wanting to know when they can expect to get a home loan again after a devastating financial event such as a short sale or foreclosure, including this one from "Jeff":

 "I was forced to sell my home short six months ago. Fortunately, that is the only negative thing on my credit report. How long do I need to wait before the FHA will consider me for a new, much lower-cost home loan?"

The answer depends on your situation at the time of the sale. According to the Department of Housing and Urban Development, borrowers are considered eligible for a new Federal Housing Administration loan if they were current on their mortgage and other installment debts at the time of their short sale and those proceeds served as payment in full.

It gets trickier if a borrower was in default at the time of the sale. Generally, the FHA will refuse to insure loans to these borrowers for three years from the date of the short sale.

Of course, as with anything else, there are exceptions. HUD will sometimes excuse defaults that were "due to circumstances beyond the borrower's control," such as the death of a primary wage earner, a long uninsured illness or lengthy job loss. However, its review of the borrower's credit report must indicate "satisfactory credit" before these circumstances.  

And, HUD officials say, it will take three years before you can get an FHA loan if you paid short on an FHA loan. I hope that helps clear up some of the confusion. Good luck, Jeff!

Remember: Your questions are welcome. We'd love to answer your questions in future installments of this column. So please submit them on the discussion board below or on MSN Real Estate's Facebook page, or e-mail them to refdback@microsoft.com.