My favorite real estate adage is, "You don't make money in real estate when you sell, you make it when you buy," and it's true. Unless you sharpen your pencil to negotiate a favorable price and terms upfront, it's tough to come out on top when you do sell.

So let's cover the steps you can take to negotiate a fair price with sellers, so that you won't leave money on the table.

The perception is that price is often a major concern with sellers. In fact, a common comment is, "We have to get our price because _______." (I'm sure you can fill in the blank with statements you've heard). But it's really not the highest price sellers are after--it's the largest net proceeds from the sale. (This is determined by subtracting the seller's closing costs and any outstanding loans and liens from the sales price.) For example, you might lower your offered price by $2,000, but show the seller that by not having to pay discount points and heavy closing costs, she's actually walking away with more cash than she would with a full-price offer. Bottom line: It's what the seller walks away with from the closing table that counts.

A second way home buyers lose out when negotiating the purchase price is by making a ridiculously low first offer. Yes, I know, sellers sometimes do take less, but put yourself in the seller's position. How happy would you be in continuing negotiations with a buyer who had just insulted you and your property? First offers set the stage for negotiations that follow. In fact, the seller may become angry and refuse to make any counteroffer; or if there is a counteroffer, the seller might try to insult you by asking for more than the property was even listed for. If you're interested in the property, be prepared to explain why you offered less. A motivated seller will be glad to listen to reason.

One last tip: Earnest money does talk. When evaluating two offers side-by-side, the one bearing the greatest amount of earnest money (or good faith deposit) will give the perception that the buyer who came up with it is also a stronger financial risk--and more serious about the property, although my not even be the case. This is an important tactic in a seller's market, however, because many buyers are vying for relatively few properties.

When it comes to negotiating the purchase price of your home, neither buyer nor seller get to win all the marbles. Decide where you want to end up, and negotiate with that end in mind.