As the others suggest, sure there's a chance to get the home. And the first contract can fail to go through for any number of reasons. In today's market, financing is the most likely.
So, submit an offer. Make it reasonable, but don't worry if it's lower than the first one. (Not that you'll know, but don't agonize over "Oh, what will happen if our offer is lower?") The sellers now are in the clear mindset of "Whew. Finally sold. Now we can pack up and move." If the first contract falls through, they'll be jarred, surprised, disappointed, and thrown off kilter. At that point, any reasonable offer will look mighty good to them.
So, submit an offer that works for you. And then wait to see whether the first contract succeeds or fails.