When you say $200k over assessed value are you speaking of the tax value? Unlike some other states (such as Florida) assessed tax value has no correlation to market value. And open houses are a pretty antiquated way of marketing. Those are generally held to help the agent find more buyers. I know of very few cases where an open house has worked to sell the house. Have your agent prepare a market analysis of the area. If that indicates that the house is overpriced by $200k then make a reasonable offer. If the sellers don't accept it, move on. No one wants to over pay for a home!
Your offer should be based on an analysis of recent, comparable sales. Sometimes this can be tough given the characteristics of the subject property. It sounds like you plan to go in $140,000 below asking price. Is that reasonable? It depends on the list price of the home. If you're offer is 8-10% below asking price, the seller is probably better off dropping the list price to attract more buyers.
Lastly - ultimately a home is only worth what a buyer is willing to pay for it. Good luck.
Thanks for having the courage to ask a tough question.
In a lot of cases the tax Assessment is not updated to the current market value of many properties. With the fluctuation of values significantly affected by the foreclosures/short sales of the area, you'll want to do a search to see the recently sold properties of a similar style and ammenities to the house you're looking at.
We would be happy to help you with this, it's free and takes 5 minutes of your time.
Let me know if I can help. I'd love the opportunity to work with you!
Don't base your offer on assessed value or list price. Have your Realtor do a Comparative Market Analysis (CMA) on the property using SOLD comps within a 1 mile radius of the property (the closer, the better) that have SOLD within the last 3 months. This will give you current market value and this is what you should base your offer on. Assessed value is not current market value.