Find other comparable properties in the area which sold between 2001 and 2003. Check to see what those sale prices were. That is the price range for the house your looking at. In this type of market, you can forget about what the seller 'wants' or what he paid for his home, or what other homes are selling for. It is a mixed bag. I have seen the same home/same plan, similar amenties with a few hundred thousand dollars difference on the same street. There is no rhyme or reason to how a seller prices his home. I have asked agents repeatedly 'on what basis is a partcular home priced?', or 'has there been a very recent appraisal?' Agents all give pretty much the same answer: "well just a couple years ago, this home would have sold for $XXX so you can see that now it is a bargain." Please don't fall for that.
Again, look to the 2001 to 2003 price range. What did that home, or homes similar to that sell for in that period? That is where housing prices should be right now. Values gained from 2004 and upward are phantom. For example, if the home was bought in 2003 at $675,000 and now the seller wants $900, you should only offer slightly above. The owner barely has 5 years into the property and since then, the housing market has crashed. There is absolutely nothing to support the asking price of $900,000 unless that is what he paid between that period. And don't fall for 'well the owner has to get his money back, or the owner has a second he has to pay off.' Be patient. If you can, wait until the fall, and my best guess is that prices will fall another 15 to 20%. Be firm, be hard nosed and tell yourself you are out to the get the best price you can. You're not buying groceries, you are buying a HOUSE. This is the most epxensive purchase in your life. Be careful, be cautious and RESEARCH, RESEARCH , RESERACH and do not take the word of a realtor....buyer beware. Good luck.