It's difficult to generalize when talking about what to offer for a house. It depends on where the home is priced, is it dramatically overpriced? Is it at fair market value? I don't think $40,000 below asking price is too low to start your offer. Have your real estate agent give their opinion on what the house is worth in todays market. You should use sold house from the past 3 months and if necessary go back 6 months. If the house is dramatically overpriced $40,000 may be to low of a reduction in the asking price.