You offer $198,000 for a house that has an asking price of $210,000. The seller comes back and says you can have the house for $205,000. What do you do?

Much of what you need to know you should already have found out, before your initial offer. There are, though, a few things to keep in mind at this new stage.

The Offer Is Contingent

Make sure that your offer is contingent on two items: 1) You're able to obtain adequate financing (if you haven't done so already), and 2) you can pull out if the property doesn't pass muster with your inspector and you and the owner can't come to terms about how to fix the problem.

Make a Serious Earnest Money Deposit

The earnest money deposit is a check that you'll give your agent to indicate that you're serious about buying the house. The check will apply toward the sales price if the deal goes through; if not, you get it back and you can tear it up. Ask your agent what's normally given -- it may be something like $3,000 -- and then raise that amount as much as you feel comfortable. It can be as much as 10% of the asking price of the house, or even more. It's up to you.

If you're serious about wanting the house, the seller and the seller's agent may be impressed with a substantial sum. It says that you're interested in the house and that you very likely won't run into problems in obtaining the financing. It's kind of like pulling a fat wad of bills from your pocket and laying them out on the table. You want to see those cash registers go "Ka-ching! Ka-ching!" in the seller's eyes. Motivate him. Make him unwilling to see that money go away.

Set a Time Limit

You can specify to your agent that the offer you've made is good for 24 hours. This lets the seller know that it's serious, and that you don't want this to drag on indefinitely. (Assuming that you're using an agent, your agent will be communicating with the seller's agent.) It also motivates the seller's agent to get in touch with the owner right away. This doesn't mean that they must accept the offer within 24 hours; it means that the ball will be back in your court within 24 hours (assuming that they don't reject the offer outright). It's smart from a psychological standpoint: There's nothing as wearying as not knowing when you'll get an answer, if ever.

Use Time to Your Advantage

If you can possibly find out anything about the owner's time schedule, do so. This was something you should already have tried to do, of course, but it may come up again. Perhaps the sellers are in a hurry because they're moving across country and have already set a move date. If they come forward and say that they'll accept your offer, but only if closing happens in 30 days, you can work with that. ("We'll pay $204,000 but we need to close in 90 days; if you want us to close in 30, we'll give you $201,500.")

Remember Not to Fall In Love With the House

If you find yourself in a state of high anxiety, step back. This may seem like your dream house, but there are going to be others. Really. Your agent should help you with this -- if she feels that they're just asking too much, and that they ought to be coming down, she's probably right. There are many houses in which you can be happy, so stand firm when you've decided that you've reached your upper limit.

Assuming that your offer is accepted, you now have to get that home inspected.