There is no “formula” for how much to offer for a home. Every real estate transaction is different; every seller and buyer are unique. Offers should fit the particular situation.
When deciding how much to offer for a property you should consider a variety of things, including the asking price, recent sale prices for comparable properties in the same neighborhood, how long the property has been on the market, the current market conditions and what you know about the seller and his/her motives for selling. You also need to factor in your own motivations and how much you want a certain property, and of course, your budget. In a strong seller’s market, buyers often do not have the luxury of trying to negotiate for a home. If you really want a home, you should make your best offer right up front. If you are outbid, do not get discouraged, or worse, caught up in a bidding war you cannot afford. Another home will come along. You should also consider looking in a slightly lower price range so your next offer will be more competitive.
In a slower market, buyers have more leverage. Again, find out all you can about current market conditions, the seller’s motives for selling, how long the property has been on the market and whether the price has come down. Even in a slow market, however, if the owners are in no great hurry or have no need to sell immediately and are determined to get their asking price, there’s no point offering them anything less than their price, provided of course you think it’s justified and you can afford it.
Ultimately, how much you really want a particular home and how much you can afford will be the final determining factors in how much you offer, and counter offer, for the home.