Every good negotiation begins with research.
The more knowledge you have, the better you will be able to negotiate alternative solutions, or refute claims intended to inflate the value being asked. To begin, have your Realtor do a comparative market analysis for the area of the home you are interested in purchasing. This will give you a realistic idea as to where the seller's asking price is compared to the market, and how much room you really have to negotiate. Bear in mind, the home must also be appraised by the lender; and they will also be looking at fair market value. Your final negotiated price needs to be equal to, or below, the loan amount you have been approved for, or you will likely need to pay the difference out of your own pocket.

Also remember that a good deal is mutually beneficial. The seller will have their own wish list of what they want out of the negotiation. Listen attentively to determine what their hot buttons are. What may be important to them may be something less important to you, and vice versa. You can use this information to leverage what you want out of the deal at some point along the way.

Another good idea is to find out why the seller is wanting to move, and when. Is the seller on a deadline? Perhaps they have already purchased their new home, or have to relocate because of a commitment to a new employer. The seller may be willing to take a lower sales price if a buyer can purchase within a desired timeframe. Is the seller planning this move because there are problems in the neighborhood? Take a walking tour of the area and ask the residents what the neighborhood is like. You can also ask the local police department about the crime rate, or check the local newspaper for crime listings. Don't be afraid to ask questions. Visit the area at nights and weekends to make certain that you are comfortable with the neighborhood. If there are concerns about the neighborhood – and they are not bad enough to deter you – then bringing these concerns to the seller can help reinforce the reasoning for your lower asking price.

Sometimes the seller is intent on getting their way on a certain point. In this case you may be able to give a little to gain a lot on a point that matters more to you. Just make sure you are getting something in return. Be prepared to split the difference in most cases so everyone involved is satisfied with the negotiation. A win-win situation for both the buyer and the seller is critical to a smooth close.