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1) Ask seller's agent for the comps they used to support the price. Maybe you are missing some comps.2) If you are concerned about the property appraising, insert a provision into the offer, "Subject to property appraising at or above purchase price," that way you will have peace of mind that the property will appraise.
If his home is priced correctly, then expecting within $5,000 of asking price is not absurd, even in this market. He likely is under no pressure to sell, except for the obvious fact that he'd like to move.
Apparently you really liike the house. If you have a realtor representing you, have him pull the comps. If they are in line with what the seller is asking for, either raise your offer or start looking for another home.
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For Sale: $299,950
For Sale: $124,900
For Sale: $1,025,000