Fall means a lot of things, including going back to school, raking leaves (in a large part of the country), pumpkins and turkey.

But for a significant part of the residential real estate market, fall means packing up the house and finding a new place to live.

Traditionally, Fall is the second strongest market (after Spring) for home buying and selling. Although today, people buy and sell homes all year long (including Labor Day and Christmas), the September through December months are packed with a special “oomph!” as folks hope to close before the end of the year.

Last week, we talked about things sellers should do to prepare for the Fall selling season. If you’re buying (or selling and buying), life’s not exactly a picnic. The market has increased in strength over much of the country, and homes are going faster than they have in years. So if you’re hoping to buy, and don’t want to experience the heartache of missing out on some great houses, now is the time to get ready.

If you plan on purchasing a home before the end of the year, the first thing you should do is figure out how much you can afford to spend on a house. Knowing is important because otherwise you might find yourself falling in love with homes that are well out of your price range – even at today’s low interest rates.

There are many factors that play into how much house you can afford, including your income, debts, assets, and liabilities. Lenders want to make sure that your monthly payments, real estate taxes, insurance, and the repairs and upkeep of the home won’t leave you penniless. Once you figure out how much mortgage you’ll qualify for, you have to analyze your assets and calculate how much cash you have for your down payment.

Lenders offer two services that all home buyer should take advantage of prequalification and preapproval. Prequalification means that the lender takes a quick look at your income, debt, and expenses, then feeds these numbers through a formula and calculates how much you can spend for your home. If you get pre-approved to buy, the lender has committed in writing to funding your loan for whichever home you eventually purchase (provided that the home appraises out in value). While prequalification is free, lenders sometimes charge an application and credit fee for completing a preapproval. Once you’re preapproved for your loan, you are a much stronger buyer in the seller’s eyes, since you already have financing in place.

It’s important to remember that you’ll have ongoing expenses above your mortgage, taxes and insurance. Condominium, co-op, and some townhouse associations require monthly or annual assessments to cover the maintenance and upkeep of common elements of the property. Single-family houses require continuous maintenance, and many experts suggest you contribute regularly to a separate house account, from which you’ll pay for emergency fix-ups (like a new hot water heater) or basic repairs.

Next, consider choosing a buyer broker to assist you in finding the right home. A buyer broker owes his or her loyalty to you, the buyer, rather than to the seller. That means, the buyer broker is on your side, and must help you find the best house at the best price on the best terms.

Be aware, however, that sometimes a buyer broker can also act as a seller’s agent. If your buyer broker is also the listing agent on the property you end up purchasing, you could find yourself in a dual agency situation — represented by no one. To avoid potential conflicts of interest, you may want to hire an exclusive buyer broker, one that never takes listings.

Finally, a word of caution. In many communities, the real estate market is picking up steam. Low interest rates have allowed many first-time buyers to get in the game. More home buyers means sellers are, in many cases, receiving multiple offers for properties. In some communities, homes are going for well over the asking price.

Should you get into a bidding war? If you do, tread carefully. While you may love that home, consider how you’ll feel down the line if prices suddenly stop appreciating and you have to sell sooner than anticipated. Consider how easy it will be to sell your home in the worst of markets.

Always set the maximum price you’re willing to pay for a given home — before you make the initial offer. That price point will allow you to step back and look objectively at your purchase, hopefully allowing you to think twice before it’s too late.

August 25, 1997