If your broker can't tell you the price the current owners paid for the house, you can find out yourself. You can look it up at the county land records/tax assessor's office. All you need to know is the year the seller bought the house. Ask either the seller or your broker for that piece of info. You can also try Domania (formerly Home Price Check) at www.domania.com, a free service that lets you check the sale price of properties in many, though not all, parts of the country. Make sure you're in the ballpark.

No matter how much you love the house, you don't want to overpay. Never, ever buy the most expensive house in a neighborhood. It will be almost impossible to sell at a profit!

Finally, take a trip to the county recorder's office and ask to see a copy of the master plan for the area. This is an incredibly important and useful document. If the asking price seems too good to be true, it might be because the county has plans to expand roads or put a new expressway through your backyard. The master plan will tell you at a glance whether you should hit the road yourself and find another house.

Step 4: Make the Offer

Unless you're buying in a really hot seller's market and your main objective is to get the house before another eager bidder does, you should offer at least a few thousand dollars less than the asking price. That's what asking prices are for; they're a starting point. If comparable houses have sold for less lately, if the owners are trying to unload the house because of changes in their lives, if the house has been listed for several months, those are all negotiating points.

The offer must be in writing. Your broker will help you draw it up. In addition to the price you offer, you should include a time limit for the response—48 hours is the norm. The seller will also require a time limit for you to obtain financing and for closing on the house. After both parties sign the contract offer, it is a legally binding document. You should have a lawyer look at it before you sign. In many states, you will have to put a percentage of the cost of the house into an escrow account, which you will forfeit if you break the contract.

Step 5: Have the House Inspected

You really must have an inspector look at any house that you're ready to buy. Most signed offers stipulate that the offer is valid pending an official inspection of the house. In some states, the seller has to complete a seller disclosure form to make you aware of any known problems, but you still have to hire your own inspector to see if there are other defects that the seller hasn't mentioned or somehow has managed to overlook.

Even then, you need to be on your toes. We don't know of any way around it. But if you're wondering whom you can trust in this crazy world, it isn't your friendly home inspector.

When we bought our first house in Maine, we got a completely clean bill of health from a home inspector, but during that first winter we had a leak in the ceiling the size of a football. It ruined a 3 ft. x 1 ft. piece of the wall-to-wall carpet. When we picked out our dream house in Florida, an inspector wrote up 15 pages of the most detailed, comprehensive home inspection report we'd ever received. We felt great about this guy. He even got the seller to make a couple of changes.

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