The background:

Imagine that you've saved some money and are at the stage in life where you want to buy a vacation home. You're not looking for anything fancy, just a cabin in the woods, far from the city, where you can get away and relax. The real estate market in your area is soft, so you're hopeful that you can find something reasonably priced. After thinking carefully about your baseline, you're prepared to pay around $200,000, though exactly how much you'll spend will depend on the particular place and how it compares with others.

On recent weekends, you've done some prospecting, meeting with real estate agents and looking at properties. These outings were enjoyable at first, but now you're discouraged. Everything that you've liked costs at least $250,000, sometimes more. Even if you negotiate well, a decent place may be beyond your budget. You may have to put this plan on hold.

But on your latest excursion, you spot a hand-painted sign, For Sale by Owner - Inquire Within. You slow down and turn into a gravel driveway. There it is: a well-maintained cabin nestled among tall pines. Off to one side is a glistening pond.

The elderly owner shows you around the place. You accept her invitation to sit down for tea and listen politely to the story of how her family built the cabin almost fifty years ago. You also talk about politics, the latest books, and even sports, yet there's been no mention of price. You're careful about spending money, but this place is by far the best you've seen. Maybe you should stretch your budget.

The owner finally broaches the topic and says, "It's always awkward to talk about money, I know, so I hope you won't be offended if I'm asking too much." It turns out that she is moving back to the city to be closer to her grandchildren. The cost of living is higher there, so she'll need to get every penny that she can garner from this sale. That's why she's not using a broker.

You brace yourself for a number that's way out of your price range. But then you're shocked when she asks only $180,000. As you know from looking at other properties, this figure is way under market value.

How do you respond?

Whatever you decide, there's no downside. draft a simple offer to purchase that gives you complete protection if there's any problem which legal title to the property or its physical condition. Likewise, you can have a small, fully refundable check to secure the deal. Now taking all that into account, how would you respond to the owner's $180,000 price?

note: I just need an example of how to negotiate a fair price. like a draft.