Clark Howard: Here's who should NOT buy a home in 2018

If you’re in the market to buy a new home, your real estate agent may suggest that you write an “offer letter” to help seal the deal.

Money expert Clark Howard says the technique first became popular last decade during the housing bubble and the letter-writing days are back in markets where inventory is low and demand is high.

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Buy vs. rent: Follow Clark’s advice before you purchase a new home

"When we hit the letter-writing time in real estate, it means that housing demand has way outstripped supply and you're going to pay a precious price for the home," Clark says.

Real estate websites like Trulia offer tips for buyers on how to write an offer letter. They suggest that a prospective buyer appeal to a seller's emotional side by telling them why they would love to make the house their forever home.

Buyers will also use offer letters to provide more information about themselves in hopes of establishing a personal connection.

Some real estate agents say these letters can be very effective, but Clark’s point is that they’re a sign the real estate market is overheated and you may be paying too much.

He’s not predicting a collapse in home values like 10 years ago, but the market will eventually cool down.

Clark suggests that if you really want to buy a home and may be going into a bidding war, you need to plan to stay put for the next 10 years. That’s a few years longer than the seven years he has recommended during normal market conditions.

"To pretty much assure you're not going to get hurt, you need to buy a home where you can see yourself living there a decade from now," Clark says.

Bottom line: Only plan to live in a house three to five years? Clark says you're probably better off renting! Trulia has a handy calculator to help you compare the net costs of renting versus buying and choose what's best for you.

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