Once you’ve found the home of your dreams, there are a few more things to think about. You're ready to purchase your home- but wait - before you sign on the dotted line, before you spend the money your lender has provided and before you start thinking about interior and exterior design, find out a few things first. Those things may help you negotiate a better, lower price than what the owner is asking.

Find out the selling prices of similar houses to use as a guideline to set your sales price. These comparable properties should:

• Have sold within the last six months
• Be built around the same time and be in a similar condition
• Have a similar number of bathrooms, bedrooms and square footage
• Be in a similar location and on a similar lot
• If you still don't feel comfortable deciding on a price to offer, consider having a professional appraisal done. Appraisers look at what the home is worth today and how the neighborhood may affect future property value. They provide a realistic figure for the true market value of the property

Once you, your real estate agent and the owner have come to an agreement on the sale price of the house make sure it is in writing.

Don't disclose your strategy and don't make oral offers. You know you want the house, but don't hand your money over until you are sure the seller is legally capable of conveying a good title and meeting other conditions. Yet the seller doesn't want to surrender the deed until you've paid for the property.

Now what?

With your real estate agent's help, offer the seller 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. A well-written contract should protect both parties.

The first contract you present should be comprehensive and include everything of importance. Remember, once the seller accepts the contract, it most likely is too late to add or change anything. Some states have standard real estate contracts. However, you should make sure that your contract includes at least the following:

• The offering price
• Down payment
• Legal description of the property
• Method of conveying the title
• Fees to be paid and who will pay them
• Amount of deposit
• Conditions under which the seller and buyer can void the contract
• The settlement date
• Financing arrangements
• A list of appliances, furnishings and personal property being sold with the home

Earnest Money

After you have decided on an offer price, the next step is to establish how large a deposit you want to make with your offer. You want the "earnest money deposit" to be big enough to show the seller you are serious, but not so large you are placing significant funds at risk.

One recommendation is to have your deposit be less than two percent of your offered price. The reason for doing this is that if your deposit is larger than two percent, the lender will pay particular consideration to how you came up with the funds. You may have to provide a copy of a canceled check along with a bank statement showing you had the money to start with. Normally, this is not a problem, but if you have a short escrow period or are barely coming up with your down payment, it could become an inconvenience.

Another reason to limit your deposit is "just in case." Although major problems aren’t always common, they do happen. "Just in case" there is a nasty or prolonged dispute between you and the seller, the less money you have tied up in a deposit, the better. This means that you have fewer funds you have placed at risk.

As with almost everything in real estate, there are exceptions to this rule, too. During a hot market, there may be numerous offers on the same house that you want. A large deposit may make an impact on a seller enough so they will accept your offer instead of someone else's, even when a different buyer is offering the same price or slightly higher. Offering a large deposit conveys to the seller that you are a serious buyer, and that you really want the house.

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