Is it proper to bid lower than asking price on real estate?

It’s a buyer’s market, and we’re looking for a new place. I am of the opinion that since the market is glutted with homes for sale, if we see one we really like (but which is slightly out of range), it’s OK to offer something less than asking price. They just might be eager to sell and be done with it.

However, Mr. Laureth has been treating asking prices as being more engraved in stone. You wouldn’t walk into a store and say, “Hey, I’ll give you two bucks for this gallon of milk, take it or leave it!” and the same is true of land.

Which is closer to the truth? If we bid, say, $5000 less than the posted asking price, will a seller (usually a bank owning a foreclosed property) be likely to laugh in our face, or be glad to get some kind of offer in a down market?