Hi S. Ford:
What you offer is entirely up to you. How the owners counter, or if they counter, is entirely up to them. If you really feel the property is overpriced this much, then make the offer.
One thing to consider. Negotiations that drag on too long start to get personal/emotional. It generally is best to try to reach a mutually acceptable result as quickly as possible. Otherwise the process of closing can get very difficult because of hard feelings.
Prudential Real Estate of the Rockies