$40,000 is the correct answer since this is what the seller has asked for. Play your hand carefully on this one if you plan on trying to negotiate a better sale price! more than 10% would be insulting to the seller, so I would say to offer like $36,000 to $37,500. If you get a counter offer that is still better than $40,000, take it! You might want to ask you Realtor to do a CMA on this property to be sure it is worth the $40,000, if it is less in Value than the Asking, then offer the CMA price, it they refuse, walk away and look for a better property!