Taking a Flier...

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ED LUNDY COULD see the danger signs of a toughening housing market when he put his suburban Baltimore home on the market last summer. So when it didn't sell after six months, he decided he had to lower the price.

By one dollar.

The reduction had barely hit the web when, a week later, he lowered it by a dollar more. His realtor says even the tiniest changes online can draw attention from curious buyers. "Let's see if this piques any interest," says Lundy, a retail-chain manager.

Welcome to real estate, version 2.0. In this post-housing-boom landscape — sales of existing homes slid 8.4% nationwide last year — it's no secret that the buyer now has the upper hand. But that hasn't stopped some homeowners from trying to beat the odds by focusing on the market's hottest new tool: the Internet. Thanks to an explosion in sites dedicated to listing, appraising and discussing available homes, the Net has taken a central role, with 80% of buyers now beginning their search online. In such a market, rapid price drops and the more frequent relisting of homes are among the many ploys to get the attention of suddenly choosy buyers.

Do the tactics work? Most real estate agents downplay them and say the slower market only reinforces the value of working with knowledgeable agents. Some argue there's only one strategy that really works today in many markets — significant price reductions — and that doing anything else risks losing a potential sale. But web-savvy homeowners insist they're getting more attention than their neighbors, and some say the moves have led to sales. Below, some of the more popular tactics.

Moving Target

Ed Lundy's rapid-fire price games might seem bizarre, but there's a method behind the madness. The minuscule price drops — he ultimately changed the price 10 times in just five weeks — weren't designed to fool anyone. At least, not human beings. Turns out that many of the leading real estate web sites, such as ZipRealty.com, as well as many sites used by brokers, alert homebuyers and brokers when the price on a listing changes. They don't, however, differentiate between big and small reductions. By changing the price frequently, says Lundy's broker, Ron Trzcinski, the listing gets repeatedly emailed to dozens, if not hundreds, of potential buyers.

Straight to the Web, No Broker

ASKING: $670,000 SOLD FOR: $660,000 Valley Glenn, Calif. 3 BR, 2 Bath, 1,453 sq. ft. on a 6,750 sq. ft. lot. Central air. COMMENT: Homeowner eschewed the Multiple Listing Service, instead self-listing his house on web sites Owners.com, FSBO.com and Craigslist. It sold in under two months for close to the asking price.

It's a tool he decided to use after numerous people came to see Lundy's house, originally listed at $349,999, and seemed enthused, but didn't bid. The house is still on the market, but Trzcinski says the new prices have nudged otherwise lukewarm shoppers to see the house in person. And small price changes aren't the only way to manipulate listings: Some sellers drop from one price level to another, then pop back up. The hope is to catch buyers searching, say, for homes above $500,000 and, separately, those looking for a place under $500,000.

List, List Again

With inventories soaring — 3.51 million existing homes were on the market in December, up 25% from a year earlier — the last thing a seller wants is to see his home languish on the market. But instead of just taking the "For Sale" sign off the front yard, sellers are trying something a little more modern, a sleight-of-hand technique called relisting.

Online listings often tell viewers how many days a property has been on the market. But on the Multiple Listing Service — or MLS, the main database of realtor-listed homes for sale in a particular area — houses that are removed and then posted again can come up as new listings. A house that has been on the market for months or even years can look brand new to a buyer. So never mind that Lori Poncsak of Pasadena, Calif., has had her house on the market since last May; by relisting, it seems fresh. "It can't look old," says Poncsak, who has it listed for $1,535,000.

Though many agents frown upon the practice, they say it's not uncommon. Still, John Tibbetts, owner of Connecticut Waterfront Properties in Darien, Conn., says buyers working with agents can fight back, because the MLS database can be searched by address, revealing the true time on market for a house. "It might be older than you think," Tibbetts says.

The No-List List

Call it the real estate black market. Instead of using a broker to list their property, some homeowners have turned to online classifieds like Craigslist or specialty real estate sites to save on commissions. And though the number of homes on them is nowhere near as large as the number on MLS, ForSaleByOwner.com has 70,000 paid listings — more than 1,100 in Brooklyn, N.Y., alone. Only about 15% of those are also listed on MLS, which means it pays to look beyond standard channels.

What's Old Is New Again

ASKING: $1,590,000 Still on the Market Columbia, Md. 5 BR, 5 Full Bath, 2 Half Bath, 4,500 sq. ft. on a 2.1-acre lot. Pool. On golf course. COMMENT: Listed in April, agent removed from MLS and relisted — twice — reducing official number of days on the market. As of February, house had been on the market 286 days, but listing reflected 160 days.

Last September, Joshua Mandell shunned MLS and listed his three-bedroom Valley Glenn., Calif., house on Owners.com, FSBO.com and Craigslist. Two months later he sold the house for just under his $670,000 asking price, without paying any broker commission. "I was worried it would take a long time, but it sure didn't," says Mandell, an attorney.

Taking a Flier

What's more attractive than the thing you can't have? In the psychologically trying real estate market, there's nothing more coveted than the homes that aren't for sale. Which is where a new feature on popular real estate site Zillow.com comes in. Homeowners who aren't really selling can put a dream "Make Me Move" price on their homes, testing the market waters without getting more than their big toe wet. Two months after the feature was introduced, 16,000 owners across the country had put Make Me Move prices on their homes.

In the digital age, homeowners are free to float as many trial balloons as they want. That's why Seattle resident Mike McDevitt, though he isn't in any hurry to move, listed a $1.1 million fantasy price for a home he bought for $730,000 two years ago. If any offer comes near his price, he says, "I'll take it, no questions asked."

Lynne