It's a scenario that still happens, despite the sobering realities of the real estate market in recent years. A lender tells homebuyers they're entitled to borrow more than they expected. Good news? Not necessarily.

Keith Gumbinger, a vice president with HSH Associates, a mortgage-publishing firm, says that even now, with stringent lending standards, some homebuyers can borrow more than is prudent.

Sean Sebold, a veteran financial planner, says, "There are lots of reasons to be conservative on how much you spend for a house. One factor is that if you overbuy and can't afford it, you'll be hit with major transaction costs to sell your home and buy a smaller one."

Among the homebuyers who should be especially careful not to overspend are people who are single and couples supporting a household on just one income, he says.

How is it possible to borrow more than you should for a home purchase?

The explanation is that lenders don't know everything about their borrowers' living costs. For example, homebuyers seeking a mortgage needn't disclose that they face high costs for their toddlers' day care or that they're helping cover a mother's nursing home bills.

"The lender is blind to everything but the income and liabilities on your record," says Sebold, who's affiliated with the National Association of Personal Financial Advisors.

"The problem is most people don't actually reduce their spending the way they expected to after moving to their new house. They keep spending as much as ever on restaurant meals, travel and expensive hobbies," he says.

Why do homebuyers continue to spend more than planned -- even after taking on a big mortgage? Sebold believes most Americans are inherently optimistic about their finances.

"Despite the current economy, the majority of people think they'll be making more money in the future," he says.

Here are a few pointers for homebuyers:

-- Watch out for mortgage brokers who push hard for business.

In the aftermath of the country's mortgage debacle, the home-loan industry has gone through a major restructuring process. One result has been tighter regulation of mortgage-lending practices. Another has been a dramatic decline in the number of mortgage brokers --intermediaries who originate loans for banks and other lending institutions.

Although there are fewer people working in mortgage lending, those still in the field are now competing as aggressively as ever for loans, Gumbinger says, and many work on commission, meaning they don't get paid unless their deals go through.

Do lenders want homebuyers to borrow more than they should relative to their financial situation? Generally not, says Gumbinger, but neither are they driven to dissuade borrowers from doing so.

"It's not the mortgage lender's responsibility to protect you from you," he says.

-- Get a grip on your finances prior to taking out a mortgage.

Sebold suggests that before looking at property, you do a careful analysis of your income and expenses to ensure you'll have adequate funds to cover your housing and lifestyle costs.

Because reducing your expenses could be even harder than reducing your weight, Sebold advises that the best way to determine how much you can afford for housing is to analyze your spending over a recent three-month period. Then assume you'll spend as much or more after you buy a home, adding in extra costs for the property, such as hardware and lawn supplies.

In fact, Sebold encourages renters to simulate what they would confront if they faced higher housing costs each month.

"Suppose you're now paying $1,500 a month for rent but plan to spend $2,500 for a house payment. While still living in your apartment, put an extra $1,000 a month in a savings account and see if you can live on the rest of your income," he says.

-- Set an upper limit on how much you'll spend for a home.

Are you working in a field with high levels of unemployment? If so, Sebold says you should keep regular contributions to savings in mind when calculating how much you can afford to put into housing.

"If you're working in an insecure job, you'd better have a year's worth of living costs set aside if you're in a one-income household," he says.

Even if you have two incomes, and believe your jobs are secure, Sebold says you'll want to add in a financial buffer when calculating what you can afford for housing.

After gaining mortgage pre-approval, he urges you to set a firm upper limit on how much you'll spend before heading out to look at property. Put this number on an index card and carry it in your pocket when you're searching for the right home, he says.

"You should always know that number before going out to buy," he says.

-- Don't let the vision of the perfect property for your kids sway you.

Sebold says many parents of young children fantasize about the ideal place for them to grow up -- with many bedrooms, a huge family room and a large, fenced yard where the kids can frolic along with the family pets. This is a fine vision if you can afford it. But he cautions that such an ideal has the potential to cause some parents to overspend, with good intentions but unfortunate results.

Sebold says that staying within your budgetary limits is ultimately in the best interest of everyone in the family, including the kids.

"You don't want your children to have the perfect house when they're very young only to have it taken away before they reach their teens," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Each year, home values are increasingly subject to neighborhood-by-neighborhood variations, says Richard M. Betts, an expert on real estate economics.

"Some neighborhoods are now hotter than hell and some are still dead," says Betts, who has followed real estate pricing trends for 45 years.

In many communities with excellent public schools, multiple bids over the asking price have become a reality lately. That's because school quality now varies more widely than in the past, and prospective buyers are acutely aware of distinctions due to the ease of obtaining test scores online or through newspaper coverage.

Meanwhile some neighborhoods in remote suburban areas continue to suffer valuation declines. That's because the public is increasingly fearful that gas prices could spike at the pump.

"People worry their commuting costs might soar if they live too far out," Betts says.

Even within the same neighborhood, there are now striking variations in home values based on the relative location and characteristics of properties. For instance, a house on a quiet cul-de-sac could be worth considerably more than a similar one on a busy road in the same community.

Of course, home values have always varied in accord with the specific location and attributes of properties. But Betts says that in the present period those disparities are even more pronounced.

"Since the 2007-2008 economic downturn, value influences have become more intensely local," he says.

Fred Meyer, a veteran real estate broker who's also an appraiser, says the increasingly fine distinctions in property values are due in large measure to the painstaking approach most homebuyers are taking to property selection.

"During the boom times, people were less picky. They figured they could buy any house or condo and its value would automatically rise. Now they're aware this is no longer true, so they're much more cautious," Meyer says.

The increasing variability of home valuations makes it all the more difficult for owners to decide how to mark their properties for sale, especially if they're trying to sell a home in a neighborhood of custom houses.

"Every home is unique -- it's just a matter of how unique," says Betts, who heads his own real estate appraisal firm.

Here are a few pointers for home sellers:

-- Search for a listing agent with a deep knowledge of your area.

When searching for listing agents capable of recommending an accurate price for your property, stick to those who specialize your neighborhood, Betts says.

"Drive the streets and look for for-sale signs. That's one way to find out who's actively working the area within your same zip code," Betts says.

He says you should disabuse yourself of the notion that someone one who scores a high volume of sales in your area will necessarily devote enough time and energy to evaluating your property to make the best possible pricing recommendation.

"Those so-called 'top producers' usually have a lot of assistants working for them. This often means they're spreading themselves thin over a large area. You could wind up working with an assistant who isn't so knowledgeable," Betts says.

-- Seek a minimum of three opinions on the worth of your home.

Much is at stake for homeowners when they decide to place a price tag on their property, Betts says.

A price that's even 10 percent more than what the market will bear is usually a big mistake, he says -- a home that's overpriced from the get-go will be shunned by buyers. In the end, this almost inevitably leads to a later sale and less money for the sellers.

In seeking the correct price for your property, Betts recommends you consult at least three potential listing agents before selecting the ideal one to assist you.

"Don't necessarily choose the agent who recommends the highest price. Remember it's the market, not the agent, that decides the true value of your home," he says.

Betts says home sellers should be aware that some agents will seek to flatter you by recommending a higher list price.

"Some agents use this as a strategy to get more listings ... knowing (the price) will have to be cut later to move the property. This isn't in keeping with your interest as a seller," Betts says.

-- Review the data used by agents to come up with their pricing proposals.

Before making a pricing recommendation, a conscientious listing agent will consider data on recent home sales for comparable properties.

"Which 'comps' the agent picks is critical. You don't want the agent to just use any three properties from your general area. Now that values are so variable neighborhood by neighborhood, the agent should choose comps in your immediate vicinity that are truly very similar," Betts says.

He says it's always wise for agents to examine more information than they will use to produce their opinion of value about a property, known within the real estate profession as a "Comparative Market Analysis," or CMA.

"An agent should examine six or eight comps before choosing the three right ones and then adjusting them for fine distinctions," Betts says.

-- Raise your antenna on how rivals in your market have priced.

Sellers tend to be biased in the belief that their place is better others, and therefore deserves a loftier price. Their emotional attachment to their home fogs their vision.

To better assess the relative value of your property before pricing, Meyer recommends you visit your competition -- homes already on the market in your immediate neighborhood. You can do this by attending public open houses or asking your agent to bring you through.

"It's imperative you become familiar with the other choices buyers have available to them and for what price. If you've been unrealistic in your thinking, this could be a sobering experience. You might find that other houses are much better kept than your house and that your neighbors have made a lot more improvements," he says.

In the course of checking out your rivals, you could discover that a very similar house has been marked down to what your agent considers a sacrificial price in order to get it sold quickly, perhaps due to a divorce or a threatened foreclosure.

After making such a discovery, Meyer says many sellers are tempted to match the underpriced property so as to remain competitive. But he says the better option -- if you're not on a tight moving schedule -- is to simply delay.

"Assuming you and your agent have done your homework and know for sure that the other house is priced below market, I recommend you just wait until the other property goes before you try to sell," Meyer says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

A couple of middle-aged engineers are going through a crisis -- the husband recently had a stroke, and his rehabilitation process is costly. The wife feels overwhelmed by her struggle to cope with her husband's illness while still keeping her job. To pay medical bills, the pair's lakeside contemporary house must soon go on the market.

But there's one big hitch: The property is crammed with years' worth of accumulations -- including endless piles of clothing, shelves bulging with books and kitchen countertops covered with gadgets. As the couple's real estate agent underscores, all these excess items must be cleared away to make the place marketable. The couple's relatives want to help, but they don't know where to start, and they're nervous about giving offense.

Some homeowners going through a tough transition -- such as a medical crisis -- are tempted to let their property go on the market in "as is" condition. But Joan Doyle, a real estate agent who's worked with numerous clients going through tough life transitions, says this is a mistake.

"When you sell, your whole house becomes a stage. If your stuff is everywhere, buyers will never be interested," she says.

For home sellers like the engineers -- who've long struggled with organizational challenges -- the prospect of getting their property cleared out and ready for sale can seem overwhelming.

"I've worked with people who are crying and shaking when I come in," says Susan C. Pinsky, a professional organizer who specializes in helping people through messy transitions.

Pinsky, author of "The Fast and Furious 5 Step Organizing Solution," says that when a serious medical problem is the reason homeowners must sell, they often need relatives to help them mobilize.

Here are a few tips for family members who wish to step in:

-- Consider contacting a professional organizer.

Many older people resist the notion of paying for help from a professional organizer -- believing it's a waste of money for work that shouldn't require outside assistance. But Pinsky says a professional can sometimes mean the difference between success and failure.

"Too often family members are very subjective about all the stuff in the house and fail to see the big picture the way a professional can," she says.

Of course, not everyone can afford a professional. If funds are limited, one possibility is to pay solely for the organizer's services at the front end in order to create a road map that others can then follow.

To locate a professional organizer in your local area, Pinsky cites the website of the National Association of Professional Organizers (www.napo.net) as one source of names. Or ask friends, neighbors or colleagues whom they've turned to for this type of help. Alternatively, real estate agents can be a good source of referrals.

"If you leave a message and they don't call you back promptly, cross them off your list," Pinsky says.

-- Divide and conquer.

What if no funds are available to pay a professional organizer? In that case, Pinsky recommends that relatives choose a project manager within the family who can then delegate tasks on a room-by-room basis.

However, Pinsky cautions that no purging project goes forward smoothly unless the homeowners are consulted when decisions are made about which items will be kept, sold, thrown out or given away.

"If the owners aren't the decision-makers, you're just wasting your time trying to help. You can't make decisions about other people's things without meeting major resistance," Pinsky says.

-- Make the removal system as efficient as possible.

All too often, Pinsky arrives at the home of clients who want organizational help but aren't set up to make the process efficient.

"The pathways in and out of the house are crowded and there are just a few tiny waste baskets for the collection of discards," she says.

To promote efficiency, she arranges for the use of large trash bins, along with trash bags of different colors to ensure, for example, that items for charity don't mingle with those destined for the landfill. Then she clears pathways to the doors to make sure it's easy to remove anything that won't be kept.

"The idea is to make the removal system as streamlined as possible," Pinsky says.

-- Be sure to protect egos and family relationships.

Few people find it easy to sort through possessions in a home they've owned for many years -- especially if they're being forced to sell involuntarily. And a culling project is especially taxing for people who have packrat tendencies or who suffer from other medical conditions, such as attention deficit disorder.

"Most people with ADD have a degree of disorganized thinking. So decision-making takes a lot of mental energy for them," says Linda S. Anderson, an ADD coach and the immediate past president of the Attention Deficit Disorder Association.

It can be exasperating and time-consuming to help disorganized relatives plow through their possessions before a home sale. But Anderson says it's important to avoid admonishing or scolding them in an attempt to push forward faster. That could backfire and tarnish your relationships in the process.

"It never helps to attack someone's character," she says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)