You've visited a few homes, and you've found one you like better than the others or at least it fits your budget. Now you need to make an offer to the seller. It should be based on what the house is worth, and also what you are willing to pay for it.

First, get an analysis of comparable properties from your agent. The houses on the list won't be exactly like the one you're interested in, but they should be similar enough to give you an idea of reasonable home prices in the area.

• Look at sale dates. Under normal conditions, a comparable house should have sold no more than six months earlier.
• Note the locations. A similar home in a different neighborhood may not be comparable at all.
• Compare the features of each property. Comparables should be roughly the same age and condition.
• Scrutinize the terms and conditions. Properties sold with seller financing, for example, can't be readily compared with those sold using conventional 30-year mortgages.

Second, think about other homes you've been in and what they were selling for. If you've owned other homes, then you have some idea of what various features are worth. You also need to consider the condition of the house, and how well it meets your needs.

Third, you need to evaluate your budget and make sure that you can afford the mortgage that goes with the offer you are preparing to make. If you have been prequalified for a mortgage, or if you already have one, then you should have a pretty good idea of how much house you qualify for and what that means in terms of a mortgage.

Finally, you need to consider the housing market in that area, the comparables, and your budget to make a decision regarding what the new home is worth to you. You don't want to pay too much for a house you really don't want, although you also don't want to pay too much for a house because you really want it. This should be a very logical decision that weighs all the factors accordingly, along with any other advice you can get, including that of your agent.

Make an offer in writing
Make an offer in writing to the seller. If you have an agent, they can execute this for you, but make sure it is in writing. Don't reveal your strategy, and don't make oral offers. You want to buy the house, but you don't want to hand over your money until you're sure the seller is legally capable of conveying a good title and meeting other conditions. The seller, in turn, doesn't want to deliver the deed until you've paid for the property.

The opening bid
Whether you should make your highest bid right away or submit a lower offer depends on how fair you believe the asking price is, how many buyers you may be competing with, and what other enticements desired by the seller you can offer.

Asking prices are usually a few thousand dollars high, and if it is being sold be the owner, there may be even more room for negotiation. If the house has been listed for months, or is now empty, you may be able to make an offer up to 10% below the seller's asking price. Your agent can give you the history of the house, and may have some insight regarding the seller's intention. Ultimately, you shouldn't offer the asking price, or something close to it, just because that's what the owner wants. Offer what you think the house is worth. If the seller wishes to negotiate, you will receive a counteroffer.

Sometimes negotiating goes on for days: offer, counteroffer, offer, counteroffer. More commonly, though, an agreement is reached on the second or third offer. Keep in mind, though, that the seller doesn't have to negotiate, and market conditions can often dictate terms with regard to how much negotiation there will be. If the market is hot, you won't want to waste time with a low offer, because someone will bid higher and you won't get a second chance to increase your offer (usually).