Steph, your realtor will be happy provide you with sold comparables for the area you are considering. Look for upward or downward trends s within the past 6 months on those comparables and also for days on market (DOM)--as these numbers can help you decide how to progress on this. You didn't mention whether the home is new construction -- there may be a lot less negotiation in those than on a resale home.
One other factor that comes to mind in our present market place is that the seller may be sticking on his price due to financial reasons. Many homeowners paid top dollar for their homes in the past few years due to competition from other buyers, and some of these homeowners also bought with 100% loans, which translates to having little or no equity in their house if they have to sell sooner than planned.
One last bit of advice -- if you offer, make that offer contingent on the home appraising for PURCHASE price, not just loan value. If the seller agrees to this and the home does not appraise, then you will have an opportunity to re-negotiate price or walk away.

Steph - A few things need to be brought to your attention. 1) Price per square foot is NOT a good indicator of value except in a situation of 2 properties that are absolutely identical in ALL aspects where the selling price and square footage of one would create a price that could be used to determine the value of the other. But no two houses are the exactly same. 2) Basements - finished or unfinished - are not included in the GLA (gross livable area) of the home. As such they are valued separately and differently from the above grade portion of the structure. 3) The value of the property is NOT determined by other properties in the neighborhood that ARE FOR SALE. Value is determined by recent SALES within the neighborhood/market area that are comparable (closest to the subject property in: square footage, age, construction, condition, design, location, amenities, etc) with necessary and appropriate adjustments for any differences including time adjustments and concessions. Active listings of comparables (For Sale) are used to help determine the direction of the market , also with adjustments for differences including days on market and list to sale price ratio. The property in question may be priced correctly to its actual value or may be priced higher or lower. Anyone can order an appraisal on any property at any time for any reason, including for a pre-listing price or offering price. If you are uncertain about the price of the home and what you should offer, tell the sellers you would like to have the home appraised before submitting another offer. If they agree to allow it, contact an appraiser. You would have to pay for the appraisal and you being the client of the appraiser would receive the appraisal report. The appraiser cannot discuss with or give a copy of the report to the seller. That would be your decision to do so - if you choose. If they do not agree to allow an appraisal, personally, I would walk away.

Steph, I guess the answer to that is, are you going to be disappointed if you don't get THIS HOUSE? In the long run is paying a little more in your mortgage worth it to you? Are you getting a mortgage? If you are the appraiser isn't going to let you overpay for a house either. If you are a cash buyer, you may want to consider having an appraisal even though it is not necessarily required.

I always tell my buyers to make a no regrets offer. If they don't get it for "that" price then they won't be disappointed that they did not get the house. I would make the no regrets offer and if the sellers don't budge tell them you are moving on. Sometimes sellers get nervous when you do that and other times they stick it out only to discover the longer it sits on the market the worse the offers will be.

There is no silver bullet answer to this. Hopefully it has been helpful to you though! Best Wishes!