Consider this a bit of a game. Your seller is playing and you were not. Now that you know the rules, your next decision is if you want to play and how. As others have said, in many areas we are in a seller's market, but some sellers are overplaying their hands. If a home is worth $350,000 you can't ask $650,000 and expect to be successful. Some may list the house at $325,000 and find that they receive multiple offers and created a bidding war. Many homes in many markets are selling for over list price. When you see something that appears to be a very good deal, prepare to have to compete to get it. When you're done, if you are successful you'll end up paying what the market demands.
It's all about strategy. Discuss this with your agent and create your own strategy.
You may walk away for a while and see if the house remains available. You can raise your price, limit the scope of your inspection or pre-inspect the home, increase your down payment or earnest money, close sooner or later, based on what the seller wants more.
Everyone is motivated by various things, see what you can do to motivate the seller to accept your offer.
Best of luck.