NEW YORK (CNN/Money) - Homebuyers and those who aspire to owning a home are watching this market carefully. That's because there are signs that the red-hot housing market may be cooling. In fact, some worry that the boom in prices is about to go bust.

If you're in the market to buy how do you best exploit what may be only a temporary pause, and if you're selling what should you do now? Here are today's 5 Tips.

When a market begins to turn, inventory (the number of homes on the market) rises and sales of homes tend to slow down. But the good news is prices don't always turn tail and plummet. More likely, prices will simply stop climbing and remain flat.

Once prices level off, watch for inventories to fall as fewer people put their homes up for sale. Smaller stakes take out the speculative fever.

There are times, though, when prices fall -- particularly in coastal markets, like Boston, Los Angeles and New York. But the pattern of these boom and bust cycles is that the gains in the boom part of the cycle far outpace the declines in the bust part.

Take the Los Angeles boom of the 1980's when prices soared more than 100 percent. Even when the market turned down, prices only fell 19 percent.

If you're looking to buy, use a strategy specifically targeted for a transitional market.

CNNfn's Gerri Willis shares five tips on timing the housing market. Play video (Real or Windows Media)

Focus your search on homes that have been on the market longer than the norm -- for several weeks or months depending on where you live. Sellers who've had their property on the market for a while may be more flexible when it comes to price.

Let's face it, if a seller was hoping to pocket a windfall by putting their home up for sale during a market peak and signed contracts for the new house before settling on the old, they could be in for trouble. Buyers should keep their eyes peeled for vacant homes, a good indication that the sellers may be paying two mortgages and motivated to sell.

If you're buying in a softening market, you'll face less competition for great houses. That means you don't have to buy just any house, you can buy the house that's right for you.

Stephen Israel, a president of Buyer's Edge, a company that represents buyers, not sellers, says its time for buyers to go back to real estate fundamentals. They should focus first on the location of the house and choose the best plot of land second. The house itself should rank as only a third consideration.

"You can always fix the house, but there is nothing you can do about a bad lot or location," he says.

A popular strategy during the red-hot housing market was to price a house slightly below market to get a bidding war going, and score big gains. But that could backfire if you try it now.

In a transitional market, you risk getting less than your house is worth. Get comparable sales data for homes that have sold in your town or area so you know exactly what your home is worth in the current marketplace.

If you're in this for the long haul, you're probably in good shape. Let's face it, busts typically don't last incredibly long -- unless, that is, a local economy is completely restructuring.

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For example, home prices in Houston, Texas, plummeted nearly 30 percent over a grisly five-year period in the late 1980s. The culprit in that debacle? A severe recession for Houston's only big employer at the time, the oil industry.

Likewise, towns whose economies are constrained by having just one big employer can find their housing market prices permanently reset lower, if that employer leaves town.

However, for most cities and towns, the housing market has rewarded long-term investors. If you're planning to stay in your home for more than three to five years, don't worry.

Gerri Willis is a personal finance editor for CNN Business News. Willis also hosts CNNfn's Open House, weekdays from Noon to 12:30 p.m. (ET). E-mail comments to 5tips@cnn.com.