If the market is slow and you're not worried about a better offer coming in while you're negotiating, offer $221K and see what happens. The seller can always counter back and the two of you can negotiate to a level you're comfortable with. Keep in mind though, if you're set on buying this particular home and another offer comes in and gets accepted at a price you would have paid, you're going to kick yourself.
That just happened to the client of a colleague of mine for a home that has been sitting on the market over 100 days. Good Luck!