In my case, for a house asking for 199,000. I offered 190,000, the seller asked back for 197,500. Even when I offered back at 197,500, I still failed to get the house.
At last, I bought one 5000 less than the listing price, which is already very fair price.
The market is still very hot now.
It depends on how bad the owner wants to sell it. If you really like it, don't take the chance. If you don't want it that bad, then offer a lower price. I think within $5000 range is reasonable.