Offer what you feel comfortable. First, make sure you find a 'price range' that you guys feel comfy in. Obviously, don't offer them the full price they want. You've got to save $, too!
They say to try to offer within $50k of the asking price. BUT it depends on things. Make your intial offer, do the home inspection and kind of go from there. If they counter-offer, depending on if you are comfy with it or not, counter-offer or not. Good luck.
Buying a house can be stressful but SO rewarding!