Short sales are different.

Lenders must approve any deal that allows a home to be sold for less than what’s owed on the mortgage, and it can take weeks, sometimes months, for them to evaluate and approve (or reject) each offer.

That makes it tough to do a lot of dickering.

So your first bid needs to be a realistic offer with a good chance it will be accepted.

Start by estimating the fair market value of the home using comps (values of similar properties that have sold near the home in the past few months).

Take the condition of the home into account and reduce your estimate if the home needs repairs.

Calculate 82% of the home’s value, throw in a few thousand dollars to cover the lender’s cost of doing a short sale (ask your agent what that typically is for your area), and you have a good starting point.

Now look at the quality of your comps.

If most of the homes weren’t foreclosures and spent several months on the market, you’ve probably got a good bid.

If most of the homes were foreclosures and only spent a few weeks on the market, you’ll have to offer more — possibly up to full market value.

In fact, home prices showed so much improvement that we have to wonder if they’ll really fall another 5% to 10% this year as some experts have projected.

The national median price of a home in the fourth quarter of 2009 was $172,900, down 4.1% from a year ago — far better than the 13.8% loss in late 2008 when the financial crisis struck.

(A median price is where half the homes sold for more, the other half for less.)

Fewer cities suffered the kind of double-digit declines that were so common during the recession — and put about one-in-five borrowers underwater on their mortgages.

Almost half of the markets the Realtors surveyed (67 of the 151) actually had higher median home prices, more than double the 30 cities that recorded price increases in the third quarter.

Prices in Akron, Ohio, for example, were 22.8% higher than a year ago, and in Cleveland they’re up close to 25%. Property values in Springfield, Ill. are more than 15% higher than they were in the fourth quarter of 2008.

Most of the places where prices continue to post big declines are in those states where the housing bubble was the biggest — Florida, Nevada, Arizona and California.

Las Vegas, Nev., for example, saw a 23.3% decline last year to a median price of $139,400 from $181,700 the year before.

Click here to find out how home prices are changing in your area.

That’s quite an improvement from July when only one of the 10 cities we looked at had those loans available for less than 5%.

It’s nearly as good as what we found in November, when average mortgage rates plunged to new record lows and loans were available for less than 5% in every single city we surveyed.

To find the best rates in each city we search the databases at Bankrate.com and Interest.com.

We compare 30-year, fixed-rate loans with no points and fees of less than $2,000 because that’s the best mortgage for most borrowers.

The best deals we found were:

Boston: 4.625% from Total Mortgage Services.

Charlotte: 4.875% from Assent Mortgage Company.

Chicago: 4.875% from AmericanInterbanc.com.

Detroit: 4.75% from Amera Mortgage Corporation.

Houston: 4.875% from EverBank.

Los Angeles: 4.875% from AimLoan.com.

Memphis: 4.875% from Atlantic Mortgage & Funding, Inc.

New York City: 5.0% from Astoria Federal Savings.

Orlando: 4.75% from EZZ Financial

Seattle: 4.875% from Mortgage Capital Associates.

The fine print: These mortgage rates are for conforming loans (less than $417,000), and for borrowers with credit scores of at least 700. For scores from 680 to 699, you’ll usually pay higher fees, up to 1% of the loan value, or a higher rate.

Sounds like a good thing, right?

But it’s the misleading title of a 53-page bill the Florida Bankers Association has drafted and wants the state legislature to enact.

The new law would make it faster and cheaper for lenders to repossess property by giving them the right to foreclose without having to go to court and obtain the permission of a judge.

That isn’t a radical idea. Thirty-seven other states already have laws that allow for non-judicial foreclosures.

But calling it “consumer protection” is a positively Orwellian attempt to manipulate public policy through propaganda and misinformation.

This is a law that could put families out of their homes in as little as three months and leave them liable for any losses the lender incurs. It is truly a bill of the banks, by the banks and for the banks.

Joe Manausa, a Tallahassee real estate broker, has already asked the very relevant question, “Does The Florida Bankers Association Think You’re Stupid?” and started soliciting more honest names.

Among the suggestions already submitted are:

• The Florida Bankers Association Bill
• The “Florida Bankers Want To Remove Judges From Making Sure The Laws Are Enforced Fairly” Bill
• The “Banks Should Be Able To Foreclose If They Feel Like It” Bill
• The “Save the Banks” Bill
• The “Bend Over!!! Your Assets are Mine!!!” Bill

We can only hope that Florida legislators think long and hard before supporting this manipulative effort — no matter how much the banks have donated to their campaigns.

Click here to read more about the bankers’ bill on TampaBay.com.

But are you getting the best possible deal?

On Jan. 1 the government required lenders to start using a new, standardized GFE that can help you decide.

On the last of the three pages you’ll find two new comparison charts that weren’t on the old GFEs created by banks and mortgage companies.

The first is called the “tradeoff table,” and shows what your monthly payments and closing costs might be for slightly different mortgages from the same lender.

The first option shows what you’d pay with lower settlement charges, which is great if you’re short on cash, but with a slightly higher interest rate and monthly payment.

The second option is for a loan with a lower interest rate, and lower monthly payments, but higher settlement charges.

The “shopping chart” allows you to compare similar loans from different lenders, including the interest rate, monthly payments and closing costs.

You can see even more comparisons like that by searching our extensive database of mortgage rates available in your area.

Even if you’ve already applied for a mortgage, it’s not too late to put the approval process on hold and pursue a better deal.

That’s a little higher than we found in our November survey of the best mortgage rates.

But six months ago you couldn’t find a bank or mortgage broker offering these kinds of loans for less than 5.25% in any of the markets we reviewed.

To find the best rates in each city we search the databases at Bankrate.com and Interest.com.

We compare 30-year, fixed-rate loans with no points and fees of less than $2,000 because that’s the best mortgage for most refinancings and purchases.

The best deals we found last week were:

Baltimore: 4.875% from Aurora Financial.

Chicago: 4.875% from Total Mortgage Services.

Dallas: 4.875% from D&H Lending Services.

Indianapolis: 5.00% from Stonegate Mortgage Corp.

Los Angeles: 4.875% from Compass Lending Corp.

Minneapolis: 4.875% from The Money Store.

New Orleans: 4.875% from AimLoan.com.

New York City: 4.875% from Mortgage Capital Associates.

Phoenix: 4.875% from NationsChoice Mortgage.

San Diego: 4.875% from American Interbank Mortgage.

The fine print: These mortgage rates are for conforming loans (less than $417,000), and for borrowers with credit scores of at least 700. For scores from 680 to 699, you’ll usually pay higher fees, up to 1% of the loan value, or a higher rate.

The average return on improvements has fallen for four straight years, slumping to 63.8% in 2009, which means every dollar spent now boosts a home’s value by an average of 63.8 cents

To determine which projects provide the best return we went straight to the mother lode of data — the brand new cost-versus-value home improvement survey by Remodeling Magazine and the National Association of Realtors.

We used that data to create a list of the 10 best home improvements, based strictly on the percentage of the cost recouped at resale.

We pulled out variations on the same themes, such as one kitchen remodeling project instead of minor, midrange and upscale kitchen renovations, which the annual survey breaks out in great detail. In those cases, we gave you the version that produced the highest rate of return.

Our top 10 home improvement projects, with the national average for cost, resale value and the percentage of the cost that was recouped, are:

Improvement 1. Replacing the entry door with a midrange steel door costs $1,172 and adds $1,470 to your home’s value, or 128.9% of the cost.

Improvement 2. Upscale siding replacement costs $13,287 and adds $11,112 to your home’s value, 83.6% of the cost.

Improvement 3. Renovating an attic into a bedroom costs $49,346 and adds $40,992 in value, 83.1% of the cost.

Improvement 4. Adding a wooden deck costs $10,634 and adds $8,573 in value, 80.6% of the cost.

Improvement 5. Minor kitchen remodeling costs $21,411 and adds $16,773 in value, 78.3% of the cost.

Improvement 6. Replacing windows with midrange wood windows costs $11,700 and adds $9,044 in value, 77.3% of the cost.

Improvement 7. Finishing a basement costs $62,067 and adds $46,825 in value, 75.4% of the cost.

Improvement 8. Midrange bathroom remodeling costs $16,142 and adds $11,454 in value, 71% of the cost.

Improvement 9. Adding a second story costs $156,309 and adds $107,286 in value, 68.6% of the cost.

Improvement 10. Replacing the roof costs $19,731 and adds $13,133 in value, 66.6% of the cost.

A minor facelift would include things such as replacing faucets, adding new flooring, new wallpaper or tile, new towel bar and toilet paper holder, maybe new doors for the shower.

Midrange remodeling adds new vanities and countertops, mirrors, medicine chest and maybe pulling the toilet and doing a new tub surround.

A midrange addition involves building a new bathroom with moderately priced fixtures, such as $165 for a solid-surface countertop with built-in sink as opposed to $500 for a custom-ordered sink that you would expect in a luxury addition.

Homeowners with pretty good credit and a chuck of equity in their homes should be able to get a HELOC for 5% or less in most parts of the country.

While that isn’t as cheap as they were last spring, when you could get one for 4% or less, they’re still the least expensive consumer loans available.

Here are some of our favorite deals from big and small lenders:

Third Federal Savings & Loan is charging 3.25% for credit lines up to $49,999 and 2.99% for lines of $50,000 to $150,000. These loans are available in 18 states from Oregon to Florida and there’s no annual fee.

BB&T Company, headquartered in Winston-Salem, N.C. with 1,500 financial centers in 11 southeastern states and Washington, D.C., charges 4.25% with a $50 yearly fee and a $5,000 minimum.

US Bank, which serves 24 states nationwide, has rates as low as 3.99% and as high as 9.25% in parts of California, Nevada and Arizona — states that have suffered the steepest declines in home prices. A $90 annual fee is assessed on some loans.

Bank Financial, which serves Illinois, Indiana and Wisconsin, has HELOCs for as little as 4.0% and a modest $20 yearly fee.

Salem Five offers a 3.25% introductory rate that increases to 4.0% after six months in five New England states — Massachusetts, Maine, Rhode Island, Vermont and New Hampshire. The $50 annual fee is waived for some checking account holders.

To qualify for one of these HELOCs you need:

• A credit score of at least 660, with the exceptions of Nationwide Bank and Third Federal Savings, which require a minimum score of 720.
• To retain 20% equity in your home after the line of credit is added on to the balance of your primary mortgage.

You just can’t count on them to tell you what’s wrong with a home because of the three dirty little secrets about the home inspection business:

Dirty Little Secret 1. The great majority of home inspectors depend on real estate agents to recommend them to their clients. And any inspector who wrecks a deal by pointing out problems with a home won’t get recommended again.

Dirty Little Secret 2. Even when confronted with a problem so obvious that it can’t be ignored, home inspectors routinely decline to estimate how much it will cost to fix.

Dirty Little Secret 3. The standard contract says you can’t hold the home inspector responsible for anything they miss or get wrong. In other words, they don’t stand behind anything they tell you.

So just how valuable is the typical home inspector’s report? Not very.

For about the same amount of money you can hire a licensed general contractor to provide a far more realistic assessment of a home’s condition and how much you can expect to spend on repairs or improvements you’d like to make.

Line one up while you’re looking and have him (or her) ready to step in before you finalize any deal.

If the contractor isn’t sure about something, he can always call in a plumber or electrician he works with to give their expert opinion. (Something else you’ll never see a home inspector do.)

Getting this kind of advice is absolutely essential if you’re buying a foreclosure or short sale that may have been vandalized or neglected, and the repairs might run into the tens of thousands of dollars.

Click here for our latest look at the best mortgage rates.

The best deals we could find on 30-year, fixed-rate loans in 10 major cities now range from 4.875% to 4.625%.

This the first month that every single city we’ve looked at had a rate below 5%, which is a substantial improvement over the 5.125% to 4.875% range we found in our October survey.

Those results reflect the fact that the average rate on 30-year, fixed-rate mortgages fell to a record low 5.06% last week.

A year ago those loans cost an average of 6.33%, and as recently as June it was still above 6%.

We look for 30-year, fixed-rate loans with no points and fees of less than $2,000. We think that is the best mortgage for the majority of refinancings and purchases.

To find the best rates in each market we search the databases at Bankrate.com and Interest.com.

The best deals we found were:

Atlanta: 4.75% from AMAC (American Mortgage Advisors Corp.)

Charlotte: 4.75% from PrimeLending Services.

Chicago: 4.75% from InterBank Lending.

Cleveland: 4.65% from Third Federal Savings& Loan.

Dallas: 4.875% from American Lending Group, Inc.

Los Angeles: 4.625% from RiteWay Mortgages.com.

New York: 4.75% from The Money Store.

Pittsburgh: 4.625% from Credence Mortgage.

Seattle: 4.75% from AmericanInterbanc Mortgage.

St. Louis: 4.875% from CapWest Mortgage Corp.

The fine print: These mortgage rates are for conforming loans (less than $417,000), and for borrowers with credit scores of at least 700. For scores from 680 to 699, you’ll usually pay higher fees, up to 1% of the loan value, or a higher rate.