A.) You could lose out if you start to low b/c another buyer could start higher
B.) You could insult them and have them straight out reject your offer
C.) The seller could counter back and you could come to terms
D.) The seller could accept your offer straight up, you don't know their motivation
It is up to you how bad you want the house and what your comfort level is as far as max price.
Your agent is working for you so they are trying to give you advice so you don't lose the home but they also do not know the sellers situation. What if the seller lost a job and wants to sell ASAP???