First, determine what the house is worth. Have your Realtor do a CMA. Considering the age and nature of the house, that may be difficult, but a good agent should be able to tell you, within a reasonable range, what the house should be worth. OK, that sets your cap. You're not going to overpay for the house.
Second, you have to consider your own finances. Even if the house is an absolute bargain at, say, $120,000, could you afford whatever the mortgage would be--roughly $750, plus taxes, insurance, maintenance, etc? And you say you have very little in down payment. Don't misunderstand; there are ways to buy the house. But is it something you can afford today, and afford tomorrow.
That leads to your consulting with a good mortgage broker to determine what you can afford and what you can qualify for. Find out what, mathematically, you can qualify for. Then figure out whether that works for you.
Then work backwards from your comfort level. If the most you're willing to pay per month is $699, and you have very little (oh, say, $5,000) for a down payment, then work with your mortgage broker and with your Realtor to determine the most you could afford to pay for the property. You take the Realtor's CMA...you take the second number (the most you can comfortably spend)...take the lower of the two...and that's the maximum you can spend.
So now that you've established the maximum, you should leave yourself some negotiating room. There are different strategies on this, of course. Say your magic number is $115,000...the lower of the CMA and what you can comfortably afford. Maybe you come in real close to that with as strong an offer as possible, with your agent conveying to the seller that this is it...take it or leave it. Another strategy relies on the old American "split the difference" fair play approach. It's priced at $121,500; your maximum is $115,000. So you offer $109,000. The seller counters by "splitting the difference" at $115,000. Voila! There you go.
But please, please, please don't worry about offending the seller. This is your purchase. Your neck is on the line. This will possibly be your home. You're the one who's going to be making the mortgage payments. This purchase has to work for you.
Hope that helps.
You are looking in a market where there is not a lot of homes available in this price range so keep that in mind, either it actually is priced too high, or your going to have some competition, in which case you'll want to make your highest and best offer, the first time. A Realtor can help you more than you know in this process looking out for your best interests. Remember, a buyer pays nothing to a Realtor to help them look for and facilitate the offering process when buying a home. That said the first thing you should be doing is getting pre-qualified with a Lender to give you an idea what your are realtistcally able to negotiate. Then I would suggest going to the Auditors website to check the sales history on this home, if there is some history available and get an idea of how much they may be able to negotiate (you can find this info at http://www.fultoncountyoh.com/elected_officials/auditor/audi ). Also remember a local Realtor has seen whats out there and can tell you if this home is indeed overpriced.
Dawn Ronski, Realtor (419.388.1891)
Oak Valley Realtors