Once you find the home you want, you need to move quickly to make your bid. If you're working with a buyer's broker, then get advice from him or her on an initial offer. If you're working with a seller's agent, devise the strategy yourself.

Try to line up data on at least three homes that have sold recently in the neighborhood. Calculate the difference between the original list price and the final price of the homes sold. If the average difference is, say, five percent below the asking price, then you know you can make an offer eight percent to 10 percent below, leaving yourself a little room to negotiate. Don't lowball -- that is, submit a bid that's 20 percent or more below list -- if you really want the house. The seller is likely to give up in disgust.

Another factor to consider in determining your bid is whether the trend in recent home sales is up or down over the past year. For instance, if homes a year ago were selling for 10 percent below list, and recent ones are going at three percent below, then you might want to tighten your opening bid to just five percent below list.

There's no foolproof system for negotiating a fair price. Occasionally it's best to deal directly with the seller yourself. More often it's better to work exclusively through intermediaries. In general, don't let the other side begin to believe you are negotiating in bad faith or being deceptive -- any deal you eventually reach has to involve trust on both sides. And be creative about finding ways to satisfy the seller's needs. For instance, ask if the seller would throw in kitchen and washroom appliances if you meet his price -- or take them away in exchange for a lower price. Remember, too, that your leverage depends on the pace of the market. In a slow market, you've got muscle; in a hot market, you may have none at all.

Once you reach a mutually acceptable price, the seller's agent will draw up an offer to purchase that includes an estimated closing date (usually 45 to 60 days from acceptance of the offer). Have your lawyer review this document to make sure the deal is contingent upon 1) your obtaining a mortgage; 2) a home inspection that shows no significant defects; and 3) a guarantee that you may conduct a walk-through inspection 24 hours before closing. This last clause allows you to check the home after the sellers have moved out so that if the movers cause any damage, or that big living room sofa was hiding a hole in the floor, you have time to negotiate payment for repairs.

You also need to make a good-faith deposit -- usually one percent to 10 percent of the purchase price -- that should be deposited by your lawyer into an escrow account. The seller will receive this money after the deal has closed. If the deal falls through, you will get the money back only if you or the home failed any of the contingency clauses.

Now call your mortgage broker or lender and move quickly to agree on terms, if you have not already done so. This is when you decide whether to go with the fixed rate or adjustable rate mortgage and whether to pay points (see "Picking a team"). Expect to pay $50 to $75 for a credit check at this point, and another $150 to $300 for an appraisal of the home. Most other fees will be due at the closing.

If you don't already have one, look into taking out a homeowner's insurance policy, too. Ask for recommendations from friends, your lawyer or your real estate agent.

In addition to the appraisal that the mortgage lender will make of your home, you should hire your own home inspector. Again, ask for referrals, or check with the American Society of Home Inspectors -- a trade group -- at www.ashi.com. An inspection costs about $200 to $350 and takes up to two hours. Ask to be present, because you will learn a lot about your home, including its overall condition, construction materials, wiring and heating. If the inspector turns up major problems, like a roof that needs to be replaced, then ask your lawyer to discuss it with the seller. You will either want the seller to fix the problem before you move in, or deduct the cost of the repair from the final price.

About two days before the actual closing, you will receive a final HUD Settlement Statement from your lender that lists all the charges you can expect to pay at closing. Review it carefully with your lawyer. It will include things like the cost of title insurance that protects you and the lender from any claims someone may make regarding ownership of your property. Title insurance can cost 2 percent of the home's price.

The lender might also require you to establish an escrow account, which it can tap if you fall behind on your mortgage or property tax payments. Lenders can require deposits of up to two months' worth of payments.

After all this rigmarole, the actual closing -- nerve-wracking though it may be -- is often somewhat anticlimactic. It's a ritual affair, with customs that differ by region. Your lawyer or real estate agent can brief you on the particulars. In essence, once you pay all the settlement charges you then sign a bond or note that commits you to repaying your loan. Next you sign the mortgage. The lender then writes you a check for the amount of the loan. Rather than taking possession of this check, however, you endorse it to the seller. Once the seller accepts this check, he hands you the deed and the keys and you own the home!

Next: For sellers only