Buying domain securely

I'm interested in a domain, I went to it and there was a parked GoDaddy page. I e-mailed the owner and he said that he is selling the domain. My questions:

1. How exactly would this work? (I already have a Dreamhost account, this would be my secondary domain)
2. How can I make sure I'm not getting screwed over?
3. What's a "fair" offer price? It would be a personal site, I'm not expecting it to get a lot of traffic.

1. the current owner must push the domain to your godaddy account (you will have to create one).
Having an hosting elsewhere doesn't change anything (you can move your domain to dreamhost, but AFTER owner change).

2. you can use an escrow service.
godaddy have one. Of course they take a few % of the amount.

3. from $1 to millions... it really depends on the domain, on the seller, the buyer... on the negotiation.

Moua gave good answers. Remember"

"A domain is worth whatever one is willing to pay for it, and can be bought for whatever amount one is willing to accept for it."

--rlparker

I never did it before. But I guess if you buy a domain from others, the owner should transfer the ownership to you. You can decide where you want to host it.

I didn't get the domain :( The seller is asking for than what I can afford. Oh well. Thanks for the answers though guys, I can use them for future reference :)

Since that didn't work out, for future reference: Escrow.com

A really easy process that takes the stress out of a high-dollar transaction with someone you don't know.