"Home prices are inflated in this area and seller wants to benefit from that, but I don't want to pay top dollar ..."

When you say prices are inflated, do you mean the list price or the sold price? Have any homes sold for less than the asking price? If not, then you might not have a lot of wiggle room. In some markets it is just a given that the buyer is going to change everything and that is not factored into cost. When we bought our last house, I realized the appliances were 15 - 20 years old and I made an offer at asking price within hours of seeing the house because I know it would go fast.

How long has this place been listed? Is it sitting? Are you ok with making a lower offer and risking it going to someone else?

If you are going to ask for less because of older appliances, do research and find out the cost of like appliances. If they have a low end GE kitchen don't figure in costs for a viking range or subzero.

A two year old appliance out of warranty can always break just as quick as a 12 yr old appliance, and paint is cheap. If your market is hot, there won't be a price difference, and like others said it depends how long it's been sitting. Look at the sales history (zillow) and see if it's a flip which they paid considerably less a year ago than the asking price now. Some can run from 50% and up to 200% more higher, I see it every day. A smart buyer sees this and can offer less knowing the seller will be happy to make 75% instead of 82% more.

Beware! As an HOA you could be walking into a money pit. Request a copy of the monthly HOA meeting minutes going back a year. Look for upcoming special assessments and discussions to raise to HOA fees to catch up on reserves. Reserves are collected to replace the roof, rebuild the pool, parking lot, ect. and residents may of voted NO on projects for years.

I strongly suggest reviewing the HOA's budget to look at reserve balances for each project which comes up every 20 or 30 years. If the roof and parking lot looks bad for example see it the HOA fees have been covering the future replacement cost. I looked at some condos Last fall with $150 HOA fees, and just saw them today with $350 HOA fees. It's appears the HOA voted to raise it the 1st of the year. Could you afford another $200 or $300 a month? See what's coming up by reading the minutes. Has the fee been updated for the huge property tax bill coming? I've see residents get hit with a $5,000 special HOA fee before and nothing new.

All I'm saying is do your due diligence to see what hidden costs are coming your way. They could be a lot more than a new carpet or frig.

It's for sale by owner. I'm the renter. They haven't put it on the market yet. Good point about the HOA.

That HOA advice was spot on, especially for a condo

With the current bank turmoil I would bet on prices stagnating or dropping, especially with condos. However, mortgage rates might go up, so your call.

I'm also house shopping at the moment. The answer to your question will vary greatly depending on where you are looking and how the market and economic dynamics have affected your area. Here in Orange County, CA, there is so little inventory that homes still see 3-20 offers, so there is zero negotiating room. In a more depressed market, maybe $5-10k at most for those items, but you still risk losing the deal.

I would offer that having some older/outdated appliances & finishes can be a positive. It can scare off other buyers thus reducing competition, and you get the opportunity to choose what you want. I've generally found "fresh paint, new carpet, and new appliances" to be a downside since they are rarely of quality, but the seller feels like they've made this grand investment in their property. Lots of lipstick on pigs out there because someone watched Flip or Flop and felt inspired. Most "remodeled" kitchens I look at are just a new counter top over old, crappy cabinets that were hastily painted white, and "stainless steel appliances!" that are bargain basement models that I would sell/replace anyway. Sellers think they have a gourmet kitchen because they put in a new $500 Amana stainless range and $300 Frigidaire dishwasher.

+1 to @kevin9408 on the HOA warnings. Always review docs, budgets, reserves, and forecasts, and consider hiring a lawyer who specializes in HOA's if anything seems fishy. Here it's ~$500 for an in-depth assessment of docs, finances, state filings, and legal claims. I have friends who walked away from a contract upon a deeper dive with the lawyer.

Good luck with your search!