If you are getting a mortgage, you won't likely overpay - the house has to appraise for at least the mortgage! If the property really is still overpriced at only $5000 more than your offer, I would worry about whether you will be able to get financing. If it's reasonable at the lowered price, can you take another look at your budget? Are you open to a counter offer, perhaps consideroing some of the suggestions offered by Virginia? If so, that should be communicated through your Realtors.