By Matt Woolsey, Forbes.com

To many who live there, Park Slope, Brooklyn, is an oasis within New York City, boasting one-family brownstones and plenty of parks, where the biggest danger is dodging strollers on the sidewalk.

Call it an urban suburb–a big-city next-door neighbor that has rejected high-rise development and highways and maintained a small-town feel without the nightmarish commute of the average bedroom community. Need proof? Park Slope is closer to downtown Manhattan than most parts of Manhattan.

Other calling cards: low population density, high-income residents, and high-priced homes.

In Pictures: America’s Top Urban Enclaves

On the East Coast, these urban suburbs are neighborhoods within larger cities. Chestnut Hill is close to downtown Philadelphia, but has cobblestone streets, stately homes and upscale shops and galleries.

“Many of the homes in Chestnut Hill are free-standing, often historic, single-family homes,” says Steve DiFrancesco, an agent at Hunter Reed in Philadelphia. “Because there are few multi-family townhouses or apartments, it has a small-town feel.”

The same goes for Park Slope and Chicago’s Lincoln Park. They may feel disconnected from the city, but their denizens still report to the big-city mayor and send their kids to the cities’ school systems.

Rich Residents

Out west, urban suburbs are generally fully independent cities within the larger metropolitan area. They maintain their own schools and police forces and elect their own mayors and city governments. Such places include Piedmont , which lies within Oakland, Calif.; West University Place, which falls within the greater Houston metro, and Beverly Hills, which calls Los Angeles home. By all measures, they are completely autonomous areas surrounded by the big city.

They are also enclaves of wealth.

In Piedmont, the per capita income is $70,000, compared to $22,000 in neighboring Oakland. Likewise, in West University Place, the per capita income is $69,000, compared to $20,000 in Houston.

“Originally [West University Place] was designed for people who didn’t want to pay high taxes,” says Marlene Rhoden, an agent at Martha Turner Properties in Houston. “Taxes are the same now, but people like the closeness of [West University Place] and the feel of walking around. It’s not very far from downtown and is very highly prized.”

Significant Spots

Historic districts like many of those on our list often stand the best chance of developing into urban suburbs.

“The one way that neighborhood character is maintained is if areas have been designated landmarks or if the type of architecture in a particular neighborhood is protected in some way,” says Deborah Fischer, a broker at Koenig & Strey in Chicago. Here, strict zoning laws in the outlying suburbs force citywide expansion, which can make it difficult for Chicago’s urban neighborhoods to maintain their character. “That way, new construction builds on the neighborhood character, rather than trying to change it.”

Chicago is immediately surrounded by numerous small upscale suburbs like Lake Forest, but within the city limits, Lincoln Park, which abuts Lake Michigan, is the best example of an urban suburb. It features views of the lake, as well as the city’s famous rowing canals and spacious parks.

Further east, Boston’s Beacon Hill is one of the city’s oldest neighborhoods and has been able to maintain its small-town colonial feel through the centuries thanks in part to its landmarked status. It has hosted notable Bostonians from Henry Wadsworth Longfellow to John F. Kennedy. Filled with red brick Federal townhouses whose stoops are lit up at night with gaslight street lanterns, the area is often referred to as though it were its own town.

“These are neighborhoods with lawns and maintained streetscapes,” says Fischer. “And the resulting lesser density that I associate with the suburbs.”

By Amy Hoak, MarketWatch

Last Update: 3:33 PM ET Oct 14, 2007

CHICAGO (MarketWatch) — These days, a real-estate agent’s paycheck doesn’t necessarily stop at a cut of the commission.

In markets with a glut of homes for sale — and there are many of them — sellers are in fierce competition, each hoping to lure buyers to their properties for a showing. Some of them are making appeals to the pocketbooks of agents working with the buyers. And the buyer might never know about that added bonus.

“With the market shifting from a seller’s market to much more of a buyer’s market, those incentives are increasing,” said Leslie Tyler, vice president of marketing for ZipRealty, a real-estate brokerage headquartered in Emeryville, Calif. “When you’re selling a home, there’s a number of different levers you can pull to move your house quicker. You can change the price, you can offer an incentive to an agent, you can paint the front door.”

Mentions of cash bonuses, gift cards and other incentives are attached to some listings — information that real-estate agents can see through professional listing services but that buyers don’t have access to through printouts or Web sites. Builders are especially fond of offering extras, sometimes sending out emails to brokerages about them, said Noah Freedman, a principal with the brokerage firm Bond New York Real Estate.

One builder, for example, recently offered a $5,000 American Express gift card to agents in exchange for a buyer who signed a contract on a Long Island City, N.Y., condominium, Freedman said. During the last year, the agent who brought in a buyer for a penthouse in a financial district building in New York City was promised a fully paid lease on a BMW for a set period of time, he added.

The main advantage of these incentives: They often catch the eyes of real-estate agents, attracting attention to one property in a sea of available homes, Freedman said.

Whether they have that much of an influence on the eventual sale, however, isn’t as clear.

“At the end of the day, you can’t make someone buy something because you’re going to get an AmEx card,” Freedman said.

Extra ethics

Real-estate agents have a responsibility to show buyers the homes that best suit their needs, said Michael Thiel, associate counsel for the National Association of Realtors. And while the perks may be nice, “the obligation to the client is primary.”

The incentive could be influential when two similar homes are available — and one of them offers a little something extra, he said. In a case like that, an agent might show the property with the incentive first. But that could be where the advantage ends.

That’s because there’s also a financial incentive to finding the right fit for a home buyer, Thiel and others pointed out. If agents get greedy and only show homes that would give them a bigger payday, there’s a chance that clients won’t like any of them. The agent then risks losing the client altogether.

In general, agents are not obliged to disclose whether they get bonus compensation on a particular home, Thiel said.

But given the vast amount of information available to buyers via the Internet, it’s easy for savvy consumers these days to know what properties are out there — and decide whether they’re being shown all of the homes that fit their needs, said Phyllis Pezenik, vice president of sales and leasing for DJK Residential, a real-estate firm in New York.

“If a buyer becomes aware of another property that is similar or better … and the agent has not told them about it, that would tend to make them wary of that broker,” she said. “If you feel through your own research that you’re not being shown all the properties that meet your criteria, that definitely is a buyer’s decision to move on.”

Before going separate ways, Thiel said it might be wise for buyers to first talk about the concerns with their real-estate agent. But when a client doesn’t believe that their agent has his or her best interest at heart, then perhaps it is indeed time for a change in representation.

“There are a lot of agents out there who will try and work with them,” he said.

As for sellers considering the incentive tactic, try and get a gauge for what other sellers in the area are offering in terms of bonuses and commission share, Tyler said. A seller might ask brokers about perks other sellers are offering.

However, some might decide it’s a better move to appeal to the buyer’s pocketbook by agreeing to cover closing costs or cutting the sale price instead. Read more on such seller incentives.

Amy Hoak is a MarketWatch reporter based in Chicago.

By Amy Hoak, MarketWatch

Last Update: 11:06 AM ET Aug 28, 2007

CHICAGO (MarketWatch) — Home sellers are not automatically turning up their noses at offers that come in far below their asking price these days as prices stagnate and the inventory of homes for sale remains elevated in many markets.

But buyers who do ask for deep discounts still risk offending sellers to the point where they quash any deal. So before making an aggressive offer, some homework is in order, real-estate professionals say. Further, buyers need to effectively explain why the price of a home should be lower

hat’s what Pat O’Heron did recently when buying a home in Ann Arbor, Mich. He was able to negotiate a steep discount with a seller who relocated for a job, in a neighborhood that had two year’s worth of inventory on the market.

Before he even made an offer, the asking price had already dropped by about $80,000, he said. After O’Heron made his case why the cost should be even lower, he eventually bought the home for $270,400, with about $11,000 in other credits. The net price ended up being $115,000 below the initial asking price.

O’Heron was able to take advantage of a market in which buyers decidedly hold the upper hand, with its excessive for-sale inventory due in large part to job losses in the area. Even though housing is in a slump in many parts of the U.S., those tactics won’t work in markets that remain healthy. See how far home prices have fallen.

And in any location in which an aggressive offer is attempted, there is always an inherent danger in going too low. There’s a real risk the offer will insult the seller to the point that they’ll refuse to counter, Realtors say, and the seller could easily make the assumption that the buyer isn’t committed to making a deal.

“There’s a danger of them taking it too personally,” said Jon Boyd, O’Heron’s agent and president of the National Association of Exclusive Buyer Agents. “When you’re making the offer, if you justify that offer with outside data, then it’s much less likely to be perceived as being an insult or (the buyer) not as serious,” he added. Visit the NAEBA Web site.

Heed these three guidelines on how — and when — to make an aggressive bid for a home:

1. Learn how motivated the seller is to make a deal

Certain sellers are going to be more willing than others to negotiate a low offer, and there are several giveaways that might indicate more leeway on the issue of price.

For instance, if the sellers have already purchased another home and that sale has closed, they’re likely to be more willing to make a deal, said Dick Gaylord, president elect of the National Association of Realtors and a broker with Re/Max Real Estate Specialists based in Long Beach, Calif. And certainly if the property has been on the market for a long time, sellers will be interested in entertaining any offers, he added.

To get at as many seller details as possible, Gaylord gets in the ear of his or her listing agent. The nuggets of information he gets can be clues as to what kind of offers they’ll consider.

Overall local market conditions also play a role. The housing market in which O’Heron bought, for example, was sluggish, and the home he bought had been on the market for about a year. Because of the job relocation, the seller needed to move and wasn’t in the position to take the home off the market until conditions were more favorable, O’Heron said.

2. Make your case with hard facts

When putting together an aggressive offer for a client, Boyd doesn’t just hand the seller a purchase agreement with the price the buyer is willing to pay — he creates a cover letter explaining exactly where that number came from.

In addition to citing comparable sales in making the offer, it also could be important to include details regarding the amount of inventory in the immediate surrounding area, he said.

“If we just looked at the relative values of the houses that sold, we would end up paying too much for that house because we know that the values are going to fall,” he said. “If we see two years’ worth of inventory, we should be buying 5%, potentially 10% less than what houses have sold for in the past year in the neighborhood.”

Buyers may even personally write a letter to the sellers to make their point, as they did when the market was hot and they aimed to stand out from the crowd, Gaylord said. That way, they can detail what they like about the house but express their fear of future dropping values.

That’s still not to say the seller will respond positively.

“The difficulty we’re having in my market right now… sale prices are not dropping, things are staying on the market longer,” Gaylord said. “Buyers read about how terrible the market is; sellers don’t want to budge because they’re reading that prices aren’t falling.”

3. Prepare for the possibility of rejection, or negotiation

Ultimately, a real-estate agent working on behalf of a buyer needs to honor and facilitate the offer that the buyer wishes to make — even if it seems to be too low.

Gaylord offers a word of warning to buyers making very low offers, pointing out that the seller might refuse to negotiate. On a “super aggressive offer,” Boyd might tell a client “there’s a one in five chance there will be a positive response.”

Still, there’s that potential for a seller to counter-offer, especially if there hasn’t been many other bids. Danielle Kennedy, a real-estate sales coach and author based in Pacific Palisades, Calif., advises sellers not to think of a low offer as an insult but as “a sign of interest.”

“And it begins the dialogue regarding the purchase of your house,” she said in an email interview. “They should make every effort to be grateful that an offer has come in.”

Also, not all hope is lost even if a seller doesn’t bite immediately.

Sometimes after time elapses, the seller comes around and decides to negotiate, Boyd said. Or new information — such as the sale of a comparable home at a lower price — can nudge a seller to give an aggressive offer a second look and open the negotiation process.

In sluggish markets, more home sellers going the way of the auction

By Amy Hoak, MarketWatch

Last Update: 7:57 PM ET Sep 20, 2007

CHICAGO (MarketWatch) — The excess inventory of condos is creating an ultimate buyer’s market in areas of Florida. So this fall, Ben Anderson is taking a different tactic to finding buyers for some of these lonely units languishing on the market without many nibbles: He’s organizing an auction.

The real-estate broker and auctioneer is gearing up to hold a three-day grand auction in November where some 45 to 60 Florida condos in three communities will be on the block. Visit the Anderson Auctions Web site.

Anderson says it’s a way to reintroduce excitement back into the selling process, forcing interested buyers to get off the sidelines where they’re waiting for further price drops. It’s also a way for highly motivated sellers to get a buyer quickly; listings typically sell in nine to 12 minutes.

Buying and selling residential real estate by auction isn’t a new concept, but it has been gaining steam in recent years. Recently, the process is also losing its stigma of being an option of last resort, associated only with distressed properties and foreclosures, according to real-estate professionals.

According to the National Auctioneers Association, more than $16 billion of residential real estate was sold by auction in 2006, an increase of 12.5% over the previous year. That’s still a fraction of the $1.74 trillion existing-home sales that were made last year, according to the National Association of Realtors.

The gains are a continuation of what has been seen in previous years, even during the real-estate boom. The group said that $11.5 billion in residential real-estate was sold at auction in 2003; the segment saw a 39.2% increase between 2003 and 2006.

But as housing markets cool, the idea is becoming more interesting to some sellers who need to move. And it’s also intriguing to price-conscious buyers who are able to line up financing in advance and commit to a contract that often doesn’t allow for contingencies.

An auction is one way to arrive at the true value of the home at that moment in time, which is especially appealing to buyers who want to make sure they’re paying a fair price as market conditions are shifting, said Tommy Williams, chairman of Williams & Williams, an auction company based in Tulsa, Okla., and the current president of the National Auctioneers Association. Visit the Williams & Williams Web site.

“They want to buy the home, they’re prepared to give what the fair market value is as dictated by their peers,” he said. “But they’re very concerned about giving a hypothetical value that could prove seriously inaccurate.”

Williams thinks that as more people get exposed to this method of doing business, even more home sales will be conducted by auction. People seem to especially like the transparency of the bidding process because all participants are aware of what others are offering for the home and all must abide by the same terms of sale.

“I really do believe this is the wave of the future in selling real estate,” he said.

Seeing auctions in a different light

One reason residential auctions are seeing a boost: The growth of online auctions such as those held on eBay as well as offline charity auctions have made the general public more comfortable with the process of bidding, Anderson said.

Tony Isbell, CEO of RealtyBid.com, an online auction site, agreed. Visit RealtyBid.com.

“If you look at eBay’s changes over the years … they started with garage sale items, now they’re selling cars everyday,” Isbell said. “People have realized that an auction can be a way to sell properties in an up or down market.”

The auction process was new to real-estate agent Carolyn Smith and her husband when they recently bid on a home in Alabama. The sellers, who were moving in order to shorten their work commutes, were looking for a quick sale, she said.

The two learned about a RealtyBid.com auction by spotting a sign in Southside, Ala., where they were looking for a vacation/future retirement home. They attended an open house, looked the property over, lined up their financing and decided to bid online.

In the end, they were in the coveted spot of being the only bidder on the home, she said. Negotiations ensued after the auction ended because the Smiths didn’t meet the auction’s reserve — the minimum price a seller is willing to take — but they still ended up getting a good deal, she said.

Smith also sees the benefit to traditional real-estate agents using the method — not only to sell a home but to connect with prospective buyer clients.

“The auction process is intriguing to a lot of people. It kinda puts the bait out there,” she said. “Not only would give your seller another avenue of advertising his property, it generates a pool of buyers. With this being a buyer’s market, that’s what we’re looking for — buyers.”

In fact, Pacific Auction Exchange, with auction franchises located across the western United States, reaches out to real-estate agents to educate them on the process, said Mike Hynes, regional sales director for the company. The auction can be one more strategy in a real-estate agent’s bag of sales tactics, he said. Visit the Pacific Auction Exchange Web site.

The marketing of an auction instantly sets a home apart from others on the market and also puts pressure on interested buyers to take action, he said.

“In a lot of places … buyers are sitting back in the shadows and watching,” recognizing that time is on their side, Hynes said. An auction gives more of that time advantage back to the seller, allowing them a quick sale.

What to know

But selling by auction isn’t for everyone.

Mainly it’s best if the seller is motivated and must sell the property, if the seller has a significant amount of equity built up in the home and if the property is easy to market, Hynes said. On average, one out of every 10 sellers who express interest in using the company to assist them in an auction will qualify to sell their home through this method, he added.

“What we’re really looking for is a seller that needs to sell,” he said.

That said, there are safeguards to protect homeowners from a final bid that is extremely low. Most of Williams’ auctions are “subject to conformation” by the seller. Sellers can also set a minimum bid or a reserve.

All auctions require a marketing blitz to attract attention prior to the auction.

As for buyers, they need to know exactly what they’re willing to pay for the home and need to research the property prior to the auction. The property should be viewed in advance and all other due diligence, including home inspections, also should come prior to bidding. Many times, they’re working with a real-estate agent to assess a property’s value.

Terms may vary, but buyers also often have to agree to a contract without contingencies, have their financing in place and have a deposit ready to go should they win the auction, Hynes said. If the deal falls through, they often lose that upfront money.

The stricter terms attract high quality, serious buyers, he said.

Amy Hoak is a MarketWatch reporter based in Chicago.

by Jennifer Openshaw
Tuesday, November 20, 2007provided by

The foreclosure market continues to boom as no relief appears in sight for stretched subprime mortgage holders. As the economy shows more signs of a slowdown, this trend is likely to continue.

Although the real estate industry would prefer otherwise, foreclosures continue to make headlines. The latest data showed superficial relief, with September foreclosures down 8% from some 243,000 in August, but still more than double last year — and still with more to come.

It may be a harsh analogy, but I often think of foreclosure buyers as the forest-floor

That means three things. First, as I see it, the sooner we get through this credit mess, the better. Second, the faster properties get through the foreclosure process and find buyers, the sooner we’ll get through the mess. So third, foreclosure buyers clean out the dead wood (I like) and get great bargains in the process (I also like).

I can save how much?
My recent column broadly covers the discount you can expect from market value if you buy a foreclosure. It varies by region, but using information published by real estate portal and foreclosure specialists RealtyTrac, I saw discounts ranging from 15% in Hawaii to 40% in Alabama, with 20% and 25% being a rule of thumb.

Not bad. So then the next question, incidentally raised by several readers, is “how do I find those bargains in my area?”

Finding the for sale signs
To locate specific foreclosures in your area, RealtyTrac is a good place to start. The site lists foreclosures by ZIP code and foreclosure stage, ranging from preforeclosure property to bank-owned real estate. It’s a broad and fairly deep picture of foreclosure availability in your area.

Some have found RealtyTrac less than precise, as the task of keeping up with foreclosure listing activity across the company is large, to say the least. And to get specific information on the property, RealtyTrac requires a $49.95/month subscription after a seven-day free trial.

But realize that RealtyTrac sits behind other real estate sites, so sooner or later you’ll probably run into RealtyTrac. If you’re serious about foreclosure shopping, you might want to sign up.

Combining sources
If you aren’t ready to make the financial commitment or “come out of the closet” as a registered foreclosure buyer, there are several other paths which work surprisingly well:

Bank sales. To their chagrin, banks and financial institutions are going into the real estate business in a big way. Too bad for them, but you can find a lot of bargains on their Web sites: Bank of America, Countrywide and U. S. Bank have good listings, to name a few. Countrywide, for example, has 300 listings in California alone priced under $170,000.

Agency sales. Banks sell their “REO” (Real Estate Owned) but often hire agencies to do the job. Such agencies include Keystone Asset Management, Lenders Asset Management Corporation and HomeEq Servicing. Some of these agencies may operate bank sites, so you may see a similarity.

Government and government-backed lender sales. Government agencies ranging from FHA and VA to HUD and the Department of Justice sell real estate, visible through a single portal. And government-backed Fannie Mae and Freddie Mac also operate sites. The variety of properties available is, shall we say, wide, but Fannie Mae in particular lists a lot of solid mainstream real estate values.

Auctions and auction houses. Local and regional auctions are becoming bigger as banks and others pile up inventory. A real estate auction specialist will announce an auction of dozens, maybe hundreds of properties in a large region or metro area. Auctioneers include Real Estate Disposal Corporation (REDC) and Williams & Williams. Experience helps in playing this game, although the auctioneer sites walk you through the process.

Local real estate specialists. A lot of agents know about action in a particular area and can hook you up with the sellers. Good agents have their eyes and ears to the ground at all times, and get tips and hear about stuff coming on the market. You can often Google “foreclosures (area)” to get local listings.

Don’t forget: reward comes with risk
Remember that, while foreclosure properties often sell at a healthy discount, you may run into poorly maintained properties. There may be other foreclosures in the immediate area, hurting the quality and value of your investment. Double check other adjacent listings and visit the area if you can.

Remember: Good value investors buy assets at the right time in the right place at the right price. Real estate is no different.

Copyrighted, MarketWatch. All rights reserved. Republication or redistribution of MarketWatch content is expressly prohibited without the prior written consent of MarketWatch. MarketWatch shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

ants consuming the dead wood to clean the forest.

By DAVID RUNK, Associated Press Writer Tue Nov 27, 5:06 AM ET

DETROIT - Rising foreclosures will lead to billions of dollars in lost economic activity next year in the nation’s major metropolitan areas, but homeowners and financial institutions have the ability to work together to contain the effects, according to a report compiled for the U.S. Conference of Mayors.

The report was released Tuesday ahead of a meeting of mayors from across the country in Detroit, where they hope to create policy recommendations to help address the nation’s housing crisis.

Prepared by forecasting and consulting firm Global Insight, the report said weak residential investment, lower spending and income in the construction industry and curtailed consumer spending because of falling home values will combine to hold back the nation’s economic activity.

“The wave of foreclosures that has rippled across the U.S. has already battered some of our largest financial institutions, created ghost towns of once vibrant neighborhoods — and it’s not over yet,” the report said.

The biggest losses in economic activity are projected for some of the nation’s largest metropolitan areas. New York is expected to lose $10.4 billion in economic activity in 2008, followed by Los Angeles at $8.3 billion, Dallas and Washington at $4 billion each, and Chicago at $3.9 billion.

The report estimates U.S. gross domestic product growth in 2008 will be 1.9 percent, coming in about $166 billion — or one percentage point — lower as a result of mortgage problems. GDP is the value of goods and services produced and is considered the best barometer of the country’s economic fitness.

The report also projects property values will decline by $1.2 trillion in 2008, due in part to the foreclosure crisis, with drops in home prices across the U.S. averaging 7 percent. And it said the loss of property, sales and real estate transfer taxes will hurt local and state governments.

But homeowners, banks, holders of mortgage-backed securities and loan servicers can work together to ease the economic effects, the report said. Agreeing to new payment terms on some loans, for example, could make the difference between a family keeping a home and losing it in foreclosure.

“Such actions will help to lessen the number of foreclosures thereby avoiding the further negative effects on local housing markets and on the broader economy,” according to the report, titled “The Mortgage Crisis: Economic and Fiscal Implications for Metro Areas.”

The National Forum on Homeownership Preservation and Foreclosures, organized by the Conference of Mayors, includes discussions about the state of the mortgage industry, ways homeowners can avoid foreclosure, and strategies to keep foreclosed properties from dragging down the quality of life in neighborhoods.

Recommendations developed at Tuesday’s forum, which is closed to the media, are to be presented at a Conference of Mayors meeting in January.

“We’re coming to Detroit with a dogged determination to fight for the families in our cities, our cities and the national economy,” said Douglas Palmer, mayor of Trenton, N.J., and president of the mayors group. “We’re optimistic that we’re going to come up with models that will work.”

In addition to Palmer and Detroit Mayor Kwame Kilpatrick, who is hosting the gathering, mayors expected to attend include Jerry Abramson from Louisville, Ky.; Michael Coleman from Columbus, Ohio; Richard Kaplan of Lauderhill, Fla.; Brenda Lawrence of Southfield, Mich.; and Elaine Walker of Bowling Green, Ky.

The housing market slump has made it harder for financially strapped home buyers to sell their homes and avoid missing payments or losing their homes in foreclosure. Increasingly, many borrowers who took out adjustable-rate mortgages and other loans with monthly payments that increase after an initial period also are finding they can’t afford the higher payments.

Jim Diffley, managing director of Global Insight’s regional services group, wrote the report with his team and was to discuss the forecasts during the mayors’ meeting. He said the goal was to provide a broad look at the effect of foreclosures, a problem mayors are keenly aware of locally.

“This is not a new issue,” Diffley said. “We’ve know about it. It’s been swelling up.”

Buyers in charge: 4 strategies

The good news: Rocky real estate markets mean home shoppers finally have the upper hand.

By George Mannes, Money Magazine senior writer

April 12 2007: 8:54 AM EDT

NEW YORK (Money Magazine) — You’ll find no better experts on the real estate boom and bust than Joyce and Louis Bertulfo.

Between 2004 and 2006 the couple successfully navigated a hot San Jose housing market, buying and selling two homes for a profit.

“Now that we’ve settled in, we’re just ecstatic,” says Joyce Bertulfo.

With two young children, Vinse and Kathryn Sullivan are looking for a Charleston home with more space.

By the time they relocated to Tampa with their three children this January, however, the winds had shifted. The pace of home sales in the area had fallen by 40 percent from a year earlier. Prices were already softening.

So Joyce, 32, and Louis, 33, spent weeks looking for just what they wanted (four bedrooms, three full baths and a three-car garage), adopting a decidedly more philosophical mind-set.

“We said, ‘If this one doesn’t work out, we’ll find another house,’” says Joyce. When they saw the ideal home, they bargained hard. The house they finally bought, originally listed at $539,000, had been marked down to $479,000.

Still, the couple offered $410,000, 14 percent below the asking price. The sellers countered with $465,000. A few rounds later they met at $430,000.

“Now that we’ve settled in, we’re just ecstatic,” says Joyce.

Welcome to real estate’s new reality, where prices are down, foreclosures are up, experts are jittery, and a lot of for sale signs are getting weather-beaten.

That may be bad news for homeowners, sellers and investors. Buyers on the other hand, have a rare point of advantage.

“We don’t often have a buyer’s market like we have now,” says Ned Marrs, a longtime broker in Colorado Springs. “Every decade it happens for a year if we’re lucky. Then it’s a seller’s market for another nine years.”

Gene Trinks, 35, moved to the San Francisco Bay area in 2002, but the engineer couldn’t bring himself to buy a house in that frenzied atmosphere. “People were just overbidding wildly,” he says. “There was a danger of paying too much without regard for what a house is really worth.”

In January, though, he and his girlfriend closed on a four-bedroom home in Oakland, paying $880,000 for a house originally listed at $979,000.

“We were the only offer, we bid below ask, and they accepted without any counters, which is a great position to be in as a buyer,” says Trinks. “We could be a little bit more in control of the process.”

Forecast: 100 biggest markets

As a buyer, you now have plenty of choice, as well as the upper hand in negotiations. You also still have the benefit of low interest rates. If you’re tempted to upgrade yet worry that your home isn’t worth what it was six months ago, keep in mind that the home you want to buy is worth less too.

Moreover, if prices have fallen at the same rate on all homes in your market, the discount, measured in dollars, will be bigger for a more expensive house.

Say you’re in a $200,000 home and want to move up to a $500,000 home. Your cost of upgrading will be $300,000.

But if prices drop 10 percent, your current house is worth $180,000; the one you’ve got your eye on is worth $450,000. Cost to upgrade: $270,000.

Last fall Vinse and Kathryn Sullivan, 29 and 28, of Charleston, S.C., decided they wanted to move from their 2,000 square-foot home in the western part of the city to a larger one on the north side, putting them closer to Vinse’s pharmaceutical-sales territory and giving them more space for their son Carter, 2, and daughter Kate, now nine months old. They listed their home, which they bought in 2003 for $215,000, for $358,000, and they expect to spend as much as $500,000 for a four-bedroom house with a home office.

Once they sell, the Sullivans are confident they can trade up. “I know I can pay the bills on a bigger house,” says Vinse, “and at the end of the day, that’s all that matters.”

Vinse has that right. You can’t be sure that a house you buy today won’t lose more value before prices recover, but if you can pay well below what sellers were getting last year, you’ve already built in a comfortable cushion against price drops.

For extra protection, buy only if you can make a 10 percent to 20 percent down payment and heed the lessons from the current mortgage madness: Adjustable rates do adjust, and when you’re paying interest-only, eventually you will have to pay the principal as well.

Can’t afford to buy the home you want at today’s fixed rates? Keep renting or look at cheaper homes. Once you jump into the market, follow these tips to make the most of your powerful position.

Free yourself to act fast Buying may be easy, but selling isn’t, so you have to guard against getting stuck with two mortgages. The best way to avoid that trap is simply to sell first.

That’s what Veronica and Maxwell Green, both 28, did last year after the birth of their baby. Realizing they were outgrowing their two-bedroom Tampa condo, they were desperate to find a bigger place. But they held off on house hunting until they had a sales contract on their condo.

“We didn’t look. We didn’t research. We didn’t do anything,” says Veronica. “We didn’t want to find something we loved and not be able to sell our house.”

Freed of their condo, they bid $275,000 for a four-bedroom home listed for $289,900. Two weeks later the seller took the offer.

Another option is to include a contingency clause in your purchase contract, which lets you exit the deal on your new home if you can’t sell your old one. Shortly after the Sullivans put their home up for sale, they signed a contract to buy a newly built one but added a clause that they could bail on the deal if their home didn’t sell by the time the new house was finished.

It didn’t, but their only loss was $800 they paid for upgrades to the new house, which the developer subsequently sold. “Lesson learned,” says Vinse. “I’m not losing sleep over it.”

Know how strong you are The longer a house has been for sale, the more powerful your position as a bidder. “Time on market is a good indication that someone is likely to be really hungry,” says Gary Eldred, author of “The 106 Common Mistakes Homebuyers Make (and How to Avoid Them).”

If you’re browsing a public multiple-listing service, don’t trust the date of that listing; sellers can game the system by briefly taking a home off the market, then re-listing it.

Ask your broker to look at the privileged MLS data, which details a home’s full listing history, complete with time on market and any asking-price changes.

Pick allies carefully You can often hire an agent who works exclusively on your behalf. Typically, these buyer’s brokers earn a 3% commission, usually paid by the seller (though if you buy from a seller using a discount broker, you may have to make up the difference).

Keep in mind that buyer’s brokers, who theoretically work just for you, may have a financial incentive to push certain homes. In some markets builders and even individual sellers are offering higher-than-usual commissions to buyer’s brokers, which can tempt your pro to skimp on negotiations or steer you to more costly houses.

Hire a broker who will work for a set fee or will sign a contract stipulating that his or her cut will be the same for any home you buy.

Wield your power If you see a house you like, chances are you can find another one that is similar. Exploit that advantage. Make demands you never would have dared ask for in crazier times, such as requiring the seller to make repairs or the builder to throw in free upgrades.

Sellers may be trying to make what their neighbors made two years ago, but they’re too late, says broker Marrs.

Don’t be afraid to start with an offer that’s 15 percent below asking price.

In February, Joyce and Louis Bertulfo passed on a house over a $5,000 difference between their offer and the seller’s. Where is it now? Still on the market, with the advertised asking price cut from $475,000 to $440,000, just $5,000 above their best offer.

Joyce’s expert advice to sellers: “Buyers are scarce these days, so when you find some, don’t let them go - especially over $5,000.”