You know what you can afford. Now decide just what you're willing to pay for the home you want.

Get an analysis of comparable properties from your agent. There should be several on the list. No two will be exactly alike, but they should be similar enough to serve as a useful tool in setting an offering price.

• Look at sale dates. Under normal conditions, a comparable should have sold no more than six months earlier.

• Note 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 terms and conditions. Properties sold with seller financing, for example, can't be readily compared with those sold using conventional 30-year mortgages.

Put it in writing

Do your negotiating 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.

Now wha? You (or your representative) present the seller with a written contract setting out the commitments and promises that you and the seller need to agree on and fulfill in order to make the sale.

The opening bid

Whether you should go ahead and make your highest bid right away or send up a trial balloon in the form of a lower offer depends on how fair 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 often have a good bit of padding built in. 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, he or she will present you with 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.