Is it realistic to ask for a 20-25% reduction on a new home?

Sometimes builders will lease out their homes if they have been on the market for quite some time. Also, their are many times that the builder keeps one home as a dedicated show home but still list it on the MLS. You can find out more information on the property by hiring a local Realtor. Most buyers don't realize this but as a buyer you don't actually pay anything to the Realtor. Builders already have this figured into their budget and the listing Realtor pays the buyer's Realtor. They originally listed it for the current listing price of $204,900 on 9-18-2008 and than priced it at $200,000 on 3/11/2010 and than back up to the original price on 11/11/2010. Sometimes, Realtors or builders will move the price up and down on a property to keep it fresh on the prospecting searches. When you are dealing with a builder, they are usually insulted at an offer as low as 20% off their asking price and most times won't even counter. Also, taking offers on their homes that are much lower than the average sales price of their homes is bad for their business because it lowers the averages of their homes all together. BUT you never know, some builders have been having a bad time financially and need to liquidate. If you are paying cash, it may make a difference to some builders as well. I'm very familiar with Cottonwood Farms, its a great area and the homes are averaging at about $100 per square foot currently.

Contact the agent and ask if the property is a standard sale. An owner has the right to price a property as he wishes. A property value is set by an appraiser after a potential buyer enters in a contract for purchase, unless the potential buyer waives the appraiser contingency at the time of the offer. If a property is over evaluated the seller needs to lower the price to the real value of property or buyer can cancel the contract.
Homes do not sell for different reasons and overpriced is one of them. Ask your agent if you have one to do some research on it and you may find out  other reasons for which this particular property does not sell and what offer may be reasonable for you to make.
You can offer any price you want, but the seller is the one that has to accept your offer. If you like this property and really want to buy it I suggest to work on you 20-25% reduction in price since Zillow zestimate is 174,000.

The worst that the seller can say is no. Best case is the seller accepts the offer or sends you a counter.

The seller has obligation to disclose to you any problems with the house ( except bank owned homes). You can always ask for a transfer disclosure bbefore writing the offer.

Hope this helps and best of luck with your purchase