Ignore the asking price. Find comps (similar houses that recently sold), then offer a few percent below the comp price (expect the market decline to continue).

Holly: The percentage will be diffferent for every case depending on these questions: How long has the property been in the market?, how much does the seller owes to the bank? , How much work does the house needs before occupancy?, is this a short sale?, is this a foreclosure? The relationship between your Realtor and the listing agent. . the answers of these questions will give an idea how much to offer below the asking price

I have to agree with Larry.. this is definitely a case by case decision. There are so many variable to take into consideration when you sit down with your Agent. Have your Agent pull as many comparables as possible so together you can make an educated and FAIR decision. If you really want the property don't play games... another buyer will end up getting the ratified contract, and NOT you.
Good luck!

Holly that is a case by case question. I usually will do quite a bit of research before advising my clients on the buy side. Case in point I got a contract signed today and we started over 5% below and asked for alot of extras. But, I did my homework and knew that the builder was hungry. He has alot of inventory and has not had any sales lately. He had not sold any at this particular community since March. So have your agent do some digging and try to find out what the circumstances are.

Hope this helps,