You really need to know what the comps are. If it's been on the market for two years, then it's safe to assume that it's overpriced at $599,000. How much overpriced? Hard to say. Probably at least 10%. Maybe more. But you really need the comps. Elvis, as usual, has given an excellent answer.
As for the other advice below...ummm...ahhh....well....no.
95%-97% if priced at market value? Well, in this case we know it's NOT priced at market value. Otherwise, it would have sold. But in today's soft market, I wouldn't advise starting out at 97% of the list price. Frankly, it's impossible to determine to the penny what market value is. And many sellers leave a bit of wiggle room anyway. If you're absolutely in love with the house and it's one of a kind, maybe 97%. Otherwise, no.
Someone else advises finding out the previous sales price, then adding 3%-4% per year in appreciation to that. No way. Not in today's market. Many markets have declined, some radically. I know lots of properties that sold for $500,000 two years ago that wouldn't bring $400,000 today. Many wouldn't bring $350,000. You want to take one of those and add 6%-8% to that? That makes the $500,000 house now "worth" $540,000...when identical houses today are selling for $350,000. Bad, bad idea.
Someone else suggests staying within 10% of the list price so as to "not insult a seller" (though he does acknowledge that the offer should be based on comps, and that 10% after two years might be too high). Do not--I repeat, do not--worry about insulting a seller. It's your money. If successful, it'll be your house. It's your mortgage. It's your offer. Let the seller be insulted by all the people who didn't make an offer. After two years, the seller should be delighted by your offer, even if it's far greater than a 10% discount.
Look, Legene: You take the comps. Make sure they're recent, and if the market's declining, as it is in many areas, discount the comps accordingly. That's your initial "maximum allowable price." Then you check with a mortgage broker, and evaluate your own finances. How much can you reasonable afford to spend? That's your second "maximum allowable price." Now, you take the lower of those two--the comps, or what you can afford--and that's your new "maximum allowable price."
Now you have the maximum you will spend on the property. At this point, you consider which negotiating techniques you want to use. Maybe you make an offer at that figure, marking it as "best and final." Or maybe you choose a figure lower than the list price, so that the average or mid-point between your initial offer and the list price is your "maximum allowable price." Or maybe you negotiate terms as well as price. This is where a good Realtor can help.
But that's how you determine what a reasonable offer is.
Hope that helps.