You just asked one of the toughest questions in real estate. You're not alone. Real estate agents field this question thousands of times each day by people hoping that there is some formula to guide them. Unfortunately, there is no easy template that everyone can use. But there are some considerations you and your Realtor® may want to contemplate before coming up with a number.
One important factor is the strength of the local real estate market. Here in Boulder, nice properties go under contract so fast that a good initial offer for a $195,000 property could very well be $200,000. Might as well get the seller's attention amidst all those other offers. In other places, perhaps where you are at, properties may still be languishing on the market and an offer of $175-$180,000, or lower, might be a perfect place to start.
There are other important factors. How does the house match up to nearby comparable properties? What is its physical condition? How long has it been on the market? Have previous contracts fallen through? Could you easily find an equally appealing property at the same price if another buyer swoops in with a great offer and gets the home under contract? Do you know anything about the seller's motivation for selling? If the seller feels pressure to sell, then you might be more aggressive with your offer.
And, of course, you must put other considerations aside and decide what the property is really worth to you.
In the end, there really is nothing simple about negotiating price.