That is the only way to do it.You will feel good about yourself and he will reaize that you are there not to take advantage.
I always tell people what I think they might get at auction(eBay is such a crap shoot) and,if I happen to want that item,I also tell them what I could afford to give them right now if they don't want to go that route.
Amazingly enough,people do respect that honesty and I have purchased several things that way.