There are many variables for setting up a successful purchase strategy regardless of the market and each property is different and each sellers motivation is different. There are no blanket rules such as 5% off or 20% off when making an offer contrary to what you may have heard. You have to compare how reasonable the existing listing prices are, what the most recent sales trends on the actual solds are, and how much equity the seller actually has. If the seller has only been in the home a short while they may not be able to go anywhere near $170K on a $200K home. I stress the word successful when making an offer because its important to do your research rather than just wing it with a price. Local markets around Atlanta are different but our prices are only down 1.5% overall compared to 2007. If you insult the seller with a low ball offer that you can't justify based on market conditions then you run the risk they will simply refuse to deal with you and that opportunity will be gone.
I agree with the previous post - you should have a buyer broker represent you - especially since it costs you nothing as a buyer, and I would be happy to talk with you to explore what you wish to accomplish and how I can help you.