Let’s Make a Deal

The seller has plenty of equity in the property and isn't at risk for being "underwater." In most areas, it's relatively easy to use public records find out the amount of a homeowner's outstanding mortgage; for a would-be homebuyer, this can be key information. A homeowner who has listed a property for far more than the amount they owe the bank has more flexibility than a seller who owes the bank nearly the full value of the home. For most homebuyers, submitting a lowball offer that's less than the seller's mortgage balance isn't a strategy with great odds of success.

The home is the last one in a new development. Builders are particularly pessimistic about the housing market right now, and plenty of them are desperate to get unsold homes off their books. That's particularly true if it's the last unsold property-as soon as the builder moves it, he can close up shop, move his sales rep to a new location, etc. That's a huge incentive to cut a deal.

The home is being sold as part of a divorce or estate sale. Particularly in a contentious divorce, soon-to-be exes may be willing to take a discount just to get on with their lives (and apart from their ex). And in an estate sale, inheritors with no sentimental attachment to a property would probably love to have if off their hands, and since an inheritance is often treated like "found money" anyway, they may be less inclined to hold firm for a particular price.

Kelman's advice on lowballs is part of a growing genre, as more buyers seek to take advantage of the soft market. On YouTube, broker Daniel Odio has posted a 16 minute video tutorial on the topic. Lowballing has also been the subject of how-to stories on MarketWatch, The Wall Street Journal and other websites in the past year or so. Kelman sees the current fascination with lowballing as a sign of the times.  "My overall take on the market is it's become incredibly anxiety ridden and inefficient, where people don't agree on price as easily," he says.

Daniel McGinn is a Newsweek national correspondent and the author of "HOUSE LUST: Americas Obsession with our Homes ."

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