09:48 AM EDT on Sunday, April 2, 2006

BY HOLDEN LEWIS
bankrate.com

After five years of sizzling growth, U.S. home price appreciation is showing signs of cooling.

For prospective homebuyers, the market shift provides a chance to remaster an old negotiating tactic: the art of the lowball offer. Strategies for securing a below-market price vary by locality. In any region, however, experts say bargain-hunting buyers can close favorable deals by applying a few basic principles.

Here are six bargain-hunting tips for homebuyers.

First tip: Buy in the offseason. The best time to buy a house is the week between Christmas and New Year's Day, says Robert Irwin, a real estate author and investor. Why? No one is looking.

"The only ones out there are people who desperately need a home or investors looking for a bargain," says Irwin.

By the same logic, early spring ranks among the worst times to make a deeply discounted offer. It's a popular time for sellers to put homes on the market, taking advantage of pleasant weather, longer daylight hours and heightened interest among buyers.

That seasonal pattern applies to most of the country. But warm climates might be the exception. Florida, Arizona and other locales popular with sun-seekers are likely to see high levels of home-buying activity in winter.

Second tip: Accept imperfections. Lots of buyers are looking for spacious, well-maintained homes in upscale neighborhoods. Few will find bargains meeting that description.

To secure a low price on a home, buyers ought to accept a few shortcomings, says Ilyce Glink, a real estate writer and talk show host. This might mean a property that needs repairs or faces a busy street. It could also be a home in a more run-down neighborhood that appears to be improving.

Third tip: Accept rejection. Unless it's truly the house of your dreams, don't be disappointed if a seller turns down your initial offers. Rejection is a normal part of the negotiating process. Some would even call it essential.

"Never make an offer you think they will accept," says Thomas Early, president of the National Association of Exclusive Buyer Agents, who lists rejection as his first rule of savvy home buying.

His second rule? More rejection.

"Make the seller say no at least twice. It's too easy to say no the first time."

Granted, that strategy doesn't work everywhere. Early wouldn't recommend it for competitive real estate markets, where it's been common in recent years for sellers to get multiple offers above the asking price.

Fourth tip: Find a guide. When you see a great-looking house in a real estate circular, you might be tempted to call the agent listed by the photo. That could be a mistake.

"A lot of buyers think that 'if I call the listing agent, I'll get a better deal.' That's not true," said Bob Wilson, an agent with the Guiltinan Group in San Diego County. Because listing agents have a duty to get the best possible price for the seller, they're not suitable advisers for crafting a lowball offer.

Buyers need someone to represent their interests. Typically, that person is a buyer's agent, who researches listings exclusively for a home seeker. When a purchase closes, the buyer's agent normally splits the sales commission with the seller's agent. In most states the buyer's agent is required to deal with the seller honestly, but unlike the listing agent is under no obligation to get the highest possible price for the seller.

Fifth tip: Look for motivated sellers. The more desperate homeowners are to sell, the more likely they are to accept discounted offers. Therefore, bargain hunters should be on the lookout for homeowners anxious to unload their properties.

One strategy that broker Chris Edwards of Raleigh, N.C., recommends is to look for listings that have been on the market longer than normal. In Edwards' market, a well-kept home in a good neighborhood typically sells within a month. Sellers with homes on the market two months or more are probably more receptive to lower offers.

Sixth tip: Don't fixate on list price. The true value of a home might not be reflected in its listed price. A property's listed price simply reflects what a seller hopes to get, usually based at least in part on selling prices of similar homes.

Glink cautions buyers against taking too much glee in getting a property substantially below list. In some cases, initial list prices are so inflated that even a buyer who negotiates a substantial discount still overpays.