It’s now your job to submit a written offer that includes a specific price.

The seller is asking $1.2 million for 500 acres. Your pre-offer research has determined that its value to you is about $650,000. The appraisal value is $900,000, but the market has softened since the appraisal’s comps were sold. The tax-assessed value is $800,000.

Here are the choices you face.

Option One is “Play it straight.” You are not willing to pay more than $675,000, so you offer $600,000 in hope that you can negotiate a deal at $675,000 or less.

You include a detailed letter explaining to the seller all the property liabilities and uncertainties that your research uncovered, as well as the over-valuation of several assets. You make a point of mentioning that three important material defects were not disclosed to you. The seller’s appraisal of five months ago is now outdated, you explain. A current appraisal would come in at less than $750,000 and would not include price discounts for the defects you’ve described. You carefully explain the problems with relying on appraisals to determine a property’s intrinsic, individual value.

This approach risks turning off the seller to working with you, since you’ve offered exactly 50 percent of his asking price. The seller will see this as a low-ball offer despite your best efforts to be transparent about your reasoning and the evidence on which it’s founded. If the seller frames your offer as an insult, he won’t negotiate. The only way to convince the seller that you’re not being arbitrary about your low offer is to show him the research you used to reach your offer.

The seller wants to get at least $900,000 from the sale and will settle for $800,000, or maybe $750,000. But your offer gives the seller no confidence that time spent negotiating with you on the basis of an offer of $600,000 will get you to where he wants to be. Unless, of course, you convince him of the depth and sincerity of your interest.

Option Two is “Roll High.” You are not willing to pay more than $675,000, but you plot a different strategy. Instead of offering $600,000, you offer $1.1 million. That’s above the seller’s appraisal value of $900,000, which the seller likes a lot. But you tie the offer to three butt-biters.

First, you offer only a $10,000 down payment and insist on seller-financing.

Second, you make your offer contingent on a three-month study of the property’s “assets and liabilities,” the results of which must be acceptable to you. If the results are unacceptable, you may void the contract offer without penalty.

Third, you state that the seller should pay your closing costs.

You are not acting in good faith. Your plan is to concede the seller financing in return for a $5,000 down payment. Your plan is to concede the seller paying your closing costs. But you are not willing to concede your 90-day study contingency, because that is the heart of your deception.

After three months in escrow, you plan to tell the seller that his property did not prove up as you had expected. A number of problems were found, and several assets were worth less than you had anticipated. Therefore, you are exercising your absolute right to void your offer because the results of the study were unacceptable.

However, you tell the seller that you will submit a no-contingency contract for $625,000, with a $5,000 down payment (with maybe some seller financing) and a fair division of closing costs.

Your plan from the beginning has been to tie up the seller with your bogus contingency, string him out for three months and soften him for your hardball offer.

The $1.1 million number was sucker bait.

Both choices are driven by the fact that you have done your homework before submitting an offer. You know that the property is only worth $650,000 to $675,000 to you, and that you won’t pay more. So your negotiating problem is to figure out a strategy that promises the most chance of getter the seller to join you at that price.

Option Two risks infuriating the seller with your tactics. This seller is perfectly within his rights to tell you to jump into a bottomless lake wearing diver boots.

You’ve balanced that risk against the tightening squeeze the seller finds himself in after three months of waiting for you in a softening market…to explode a cigar in his face.

I’ve seen both options work…and I’ve seen both fail.

The Third Option is, Take-It-Or-Leave-It. Your buyer’s price is $650,000, which is what you offer with no contingencies and a reasonable down payment. You explain how you arrived at that offer, and that you don’t want to give the seller the impression that you’re willing to come up in price. I’ve seen this succeed and fail too.

Each of these offering price strategies has been driven by the fact that you know the property is only worth $650,000 to $675,000 to you, and that you are unwilling to pay more.

Is there a fourth option?

Maybe. Here’s an example.

You offer $750,000, with the seller financing $350,000 at 0 percent interest payable in one lump sum of $350,000 in 15 years. Although you are paying $100,000 more than your $650,000 price, you are getting that $350,000 interest free. If you had financed all $650,000, you would have ended up paying more in interest over 15 years than under your proposal. You end up financing only $400,000 of the $750,000 selling price. And the last $350,000 will be paid in dollars eroded by inflation. These specific numbers are to illustrate the approach. The workability of actual numbers will depend on many factors.

Keep in mind that mortgage interest is tax-deductible up to its cap. That means a dollar in interest the buyer pays is less dear than a dollar in principal.

The buyer needs to plug in specific numbers to craft a proposal that makes financial sense from the buyer’s point of view. The extra price paid has to be more than offset by the savings on interest when tax consideration are factored in. The interest the buyer saves on conventional financing has to be significantly more than the extra money in sales price.

Here’s another example.

The seller values his 500 acres for hunting, but needs cash to finance his retirement. So the buyer can propose a ten-year, no-cost hunting lease to the seller as part of his $650,000 offer. The seller comes up $100,000 short, but he keeps what he really wants in the property—the hunting rights.

For most buyers, their thoughts on offering price are anchored in the seller’s asking number.

That’s not the right place for the buyer to be most of the time.

I’ve come to the conclusion over the years that most buyers do not need to buy most properties at which they make a purchase run. A buyer may need to buy some property at a particular time, but not necessarily a particular property. A buyer’s level of need always depends on his BATTP—Best Alternative To This Purchase. The better a buyer’s BATTP, the more negotiating power he’s likely to have.

Buyers can choose among properties, particularly in a buyer’s market.

If, as I believe, most property purchases are essentially discretionary and voluntarily from the buyer’s point of view, it follows that buyers should have a formula for determining a property’s right price from their perspective.

The formula that I’ve concocted is something like this: The right price for the buyer is based on his pre-offer research into the total net value of the property’s disaggregated assets, together with an analysis of the buyer’s resources available for purchase and his plans for the property.

The buyer must approach each property as a bundle of assets, some of which can be severed and sold, leased or used to generate income. These assets have value in the market that can be determined, but more important, the buyer assigns each asset a value to him.

When the total net value of the disaggregated assets falls short of the asking price, that number is the buyer’s offering-price anchor. Or, it may be a signal to walk way…fast.

Here are several ways of looking at asking price and offering price.

A seller owns 500 acres that he’s priced at $7,000 per acre, or $3.5 million. It has a main house, barn complex and a tenant’s house in a far corner set back from the road. Two hundred acres are cropland, 100 acres are pasture and 200 are woods. The farm will convey with all mineral rights, and natural gas is a likely lease possibility in the future. The farm has various conservation-easement values, depending on what restrictions are imposed. It generates $30,000 a year in farm income.

Scenario 1: The seller hands the buyer an appraisal showing $3.5 million. The buyer commissions his own appraisal, which comes back at $3.5 million. The buyer makes the deal at $3.5 million.

Scenario 2: The seller hands the buyer an appraisal showing $3.5 million. The buyer immediately offers 20 percent less, or $2.8 million. They haggle. They settle for $3.25 million, which is $200,000 more than the seller had hoped for.

Scenario 3: The buyer investigates the property’s assets before making an offer. He hires consultants to establish the discrete value of 150 acres of cropland, 50 acres of cropland plus main house and barn, 100 acres of pasture, merchantable timber on 200 acres of woods, future value of gas rights and conservation-easement values. He comes up with a total of $5 million. The buyer makes the deal for $3.5 million and sells $1.5 million in discrete assets for $2 million. The buyer is left with 350 acres, the main house and barn for $1.5 million. But he’s in for some post-purchase surprises.

Scenario 4: The buyer investigates the property assets and liabilities before making an offer. Assets are valued at $5 million, but there are deductions for liabilities. A neighbor has fenced in 40 acres of pasture that is the seller’s by deed. Other boundaries are disputed. The buyer faces a $25,000 survey cost, which does not guarantee resolution. Lack of resolution means he can’t divide the property and sell the pieces he doesn’t want.

The merchantable timber worth $3,000 per acre can’t be logged because it’s sited on habitat for the federally endangered blue-eyed nosepicker, which also means no development. The cropland harbors an invasive species that the appraiser didn’t know about which limits its value. The appraiser also didn’t know about the noxious weed infestation in the pasture that reduces livestock gain by 25 percent. And 150 acres of open land are in a 50-year floodplain. Netted out the adjusted value is $2.1 million. The buyer submits all of his material to the seller, with the words that such matters need to be disclosed to all buyers who come after him. They settle at $2.35 million.

Scenario 5: The buyer is interested in the main house and only 300 acres. Assets are valued at $5 million with a discounted value at $2.1 million. The buyer pays $2.35 million and sells 200 acres, which includes the tenant’s house and most of the floodplain. He treats the cropland and pastureland curing them of their afflictions. He sells the woods for $800,000 to a conservation group who promises to protect the nosepicker for ever. He leases the gas rights under 500 acres for $25,000 with a 12.5% royalty of net on future production. His lease includes a No-Surface Occupancy provision.

His sales are: 100 acres of woods, $800,000; tenant’s house and 20 acres, $300,000; four 20-acre lots, $100,000 each, for $400,000. Net cost to buyer of purchasing main house and 300 acres, $2.35 million less gross sale proceeds of $1.5 million = $850,000, or $2,833 per acre including main house and barn complex.

I have seen each of these scenarios play out in what one of my college professors used to call “real life.” It’s useful to remember the words of Steven Cohen, head of The Negotiation Skills Company and author of Negotiation Skills for Managers: Price is what you pay; value is what you receive.

A buyer must understand through pre-offer research what value he will receive, which then determines the price he’s willing to pay and not pay.

Pre-offer research provides a buyer with the net value (gross value less discount costs for liabilities) of each asset. That approach and level of analysis helps the buyer develop a post-purchase plan. The combination of determining the net value of all the discrete assets on a particular property and developing a post-purchase plan leads a buyer to an offering price.

Once the buyer establishes the net value price of the property to him, he can then determine the intensity of his interest in a purchase and set an offering price that makes sense. It’s not that hard to do, but most of us don’t bother.