Whether or not you counter-offer is entirely up to you. But I think more depends on your position than in what you think the house is worth. How long has the house been on the market? How many offers have you gotten? How long can you keep the house on the market without losing 50% of 25K? If you're in a good position, definitely counter-offer and keep the negotiations going. Personally, I plan on putting in my best offer at what I think the house is worth at the outset, and walk away from counter-offers, but other buyers vary.
Mukwonago had been slower until the last few weeks. I am not familiar with your particular house, but I live in Mukwonago and know the market pretty well. Unless your house is totally run down, I have to assume that your price is pretty fair.
Right now many buyers reacting to the news reports are throwing out very low offers to see what sticks. Counter the buyer, show a little movement to show a willingness to work with them, but don't give up everything. One major rule in negotiating is never let the deal die in your hands. If you can't accept their terms, then always counter and never reject, it will keep them in the deal. Even if you keep countering at the same terms you had previously offered.
I wish you luck!