Since negotiation is not part of our everyday purchasing habits, it's perfectly normal to feel uncomfortable with the whole idea. But when you're buying a home, the only way to get out of negotiating is to accept the sellers' asking price, which might mean paying more than the home's fair market value. To avoid that sinking feeling that you paid too much, keep reading this page to find out about:

• A sample negotiation scenario
• Handling your emotion
• Money-saving negotiating tips

Say you make an offer on a beautiful Spanish-style ranch home with an asking price of $112,000. Your real estate agent tells you that comparable homes in the area sold in the last six months for $100,000 to $110,000. So you make an offer of $100,000. Your real estate attorney or your agent prepares a contract, writing in the appropriate contingencies, including the condition that all appliances and light fixtures remain in the home. Your real estate agent then formally presents the offer to the sellers. In a couple of days, you receive a counter-offer of $110,000 with the seller's contingency that you submit a pre-approval letter from your lender. After a couple of more rounds, the seller finally agrees to come down to $105,000 if you move the closing day from four weeks to six weeks to allow their kids to finish school. You need to close in four weeks, but you offer to let the sellers rent the house from you for two weeks after closing. The sellers accept. A deal is struck!

The example above neglected to mention the emotions that might come up along the way. We're talking about your dream home and all your hard-earned savings, so of course feelings are likely to play a strong role in the process. You can't control their existence, but you can control where and when you express them. Even though it may feel personal when the sellers insist on a pre-approval letter from your lender, getting angry or indignant in front of the people involved in the transaction can do more harm than good. Besides, look at it from the seller's perspective: They are taking their home off the market to work with you; they want to sell to someone who is financially capable of buying their home, or else the ping-pong game of negotiating is a waste of their time.

• Whoever made the most recent offer is legally bound to that offer until it's either withdrawn by that party or the other party answers.
  
  
• Get all counter-offers and contingencies to the purchase offer in writing, initialed by both parties. Your real estate attorney can prove especially helpful here, making sure all amendments are legal and clear to both sides.
  
  
• EVERYTHING IS NEGOTIABLE! From the price to the closing date to the sconces on the living room walls.
  
  
• The bigger the gap between the asking price and the offering price, the more time you should allow to reach a mutually satisfactory price.
  
  
• Be aware of how long the home has been on the market. If it's been a while, say a few months, you might have a slight edge when negotiating.
  
  
• A home inspection typically isn't done until after a purchase offer is made, so be prepared to enter the negotiating phase without a crystal clear picture of what you're getting. Once you learn what the home's physical problems are, you can go from there, asking the seller to make the repairs or lower the price, or you may choose to walk away if you think the problems are too extensive--that is, IF your attorney has included a contingency spelling this out! If the contract says you must buy the home at a particular price "as is" or with narrow limitations, you don't have much bargaining power.
  
  
• If you're not the only buyer bidding on a home, remember that the seller is looking for the best offer in terms of price, terms (who's paying for closing, repairs, etc.), and contingencies. Too many conditions and the seller may very well turn up their nose and go with a less-demanding buyer.
  
  
• Pick your battles. Know ahead of time what's really non-negotiable to you, then be willing to compromise on the lesser issues.
  
  
• Keep your feelings out of your finances. If you can only afford to pay $169,000 for a home, don't go far above that number in a panic that you might lose this house. Be willing to walk away, trusting that there are more fish in the sea.
  
  
• Keep your eye on the ball. The goal is to get your dream house for a fair price, not to send the seller down in flames by getting everything your way.