The real estate market is dynamic and tends to react to other economic forces with vigor, sometimes welcome and other times unwanted. For several years home prices have been rising, bringing elation to homeowners and frustration to buyers.

As the mortgage market is shaken almost daily and borrowers face tough financial situations, the real estate market has softened. These are expected changes in a cyclical process but timing the market to your benefit can be tricky. Anticipation is quite different from prediction but with some basic understanding you can maximize profits and the performance of your real estate investments.

There is some simple wisdom to successful investing: buy low, sell high. This is a logical philosophy but determining when those high and low points may occur is not a simple task. There is no regularity to the real estate cycle, we only know that it does go up and down. As to when or how long it stays high or low even expert investors are only forecasting. There educated guess is not unlike a 50% chance of rain.

But like meteorologists, real estate experts study patterns and forces. We all understand that a storm becomes a hurricane and then extorts varying degrees of severe weather. The key is that weather experts can say there is a hurricane, whether it’s a Category 1 or 5 is only something that real time events will reveal.

Looking at real estate investments is much the same. If a storm is brewing, get prepared. If the guy on the evening news tells you it will rain, bring your umbrella. If that same guy tells you to expect hurricane force winds, go buy supplies. If a real estate expert predicts a flood of soaring prices or landslide in home values, you’ve got to get yourself ready to weather the storm.

If you are a buyer and the market appears to be softening in your favor, take your time before making a decision. Buyers have been priced out of many markets for the past several years, but that is likely to change. The worst case scenario for buyers these days is that the market will “flatten” without a drop in home prices but also without an increase.

The best case for buyers, properties will drop in price and present “buy low” opportunities. Just remember that time is on your side but also that you’ll need to ride out the rest of the downswing before values start to build again. Your finances and mortgage should be skidproof, in other words your boat should be storm worthy or at least your personal flotation device.

Sellers and homeowners face more difficulties in a down market. As home values fall and interest rates vary, homeowners find cash and equity disappearing. If you find yourself wanting or needing to sell, it’s likely that the sooner the better.

Personally, I’ve just sold an investment property and can see in hindsight that the timing was right on. I owned a small condo that I had kept rented out. A confluence of events seemed to tell me it was a good time to sell. First, the tenants were moving out and buying a home. The market in the area had experienced a tremendous upswing in property values but experts were predicting these to stagnate.

My choices were to rent the unit out again and ride out the storm or cash out high. Compared to dealing with tenants, even very good tenants, in a questionable economy, cashing out before the storm meant my money wouldn’t sink. Just a few days later, a similar unit went up for sale for $5,000 less than mine. I’m not sure of the reason for the price variance but can only guess that the owners were in a hurry to sell, telling signs of a shaky economic market.

Now, many real estate investors say successful investing means you buy it and keep it. There is a lot of value in that advice but you’ve got to look at the cost of keeping real estate over the long haul. Down economies affect renters and buyers. People lose their jobs regardless of whether it’s a mortgage or a rent check they sign every month. The fact is it depends on what you want to carry on your own should your tenant be affected by a soft economy. In this instance, I opted to put cash on a safer bet.

Of course, I could be missing the last bit of appreciation that this particular property might experience. But, come the time of tightened lending and higher unemployment, there would be no guarantee that a buyer would be there and actually less likelihood of finding a qualified buyer. As the market changes, I can watch it without needing to take action and because my equity is no longer vulnerable to a volatile market. I’m prepared to weather the storm and take advantage of the next opportunity.

No real estate investment is perfect. You might buy too late or sell too early in a changing market but if you can carry the property through to better weather you’ll do fine. Even if you’re not buying to keep it, apply this mentality for a reasonable amount of time. The market always will and does change, it’s just a matter of being able to ride it out unscathed. The most successful investors operate in proactive mode - they don’t necessarily have to react to the market but can take advantage of opportunities. This is the position that you want to be in.

*Note: The information in this article is general advice and not meant as a substitute for personal guidance from a financial advisor, real estate professional or legal counsel. Although the author is a licensed realtor, the advice given in this article does not constitute any client contract or agreement between the author and the user. The author is not responsible for any losses, damages or claims that may result from your decisions.