Counter at $155,000 if that's your best offer. If they still say no, walk away and move onto the next. You need some sort of motivation for someone to accept a lower price. If it isn't there, 9 times out of 10 you aren't going to make it there unless you are very very good at sales. I'd say, NEXT!
What does your Realtor determine it is worth from all the comps in the neighborhood? Is $199900 Fair Market Value, or is $275k FMV. It really all depends on what FMV is. Do you have an estimate on repairs?