Negotiating with a builder - how to play it?

[Sean Johnson]

I'm actually looking for advice as someone negotiating against folks like some of you. I'm looking at a townhouse listed for 1.05. New construction. I've offered 850 to start, hoping to get it for 950. 

Pros: They've listed in September and dropped the price 200k in 3 months (although they somehow removed that from mls). Closest comps we could find were for around 750-800, although none were new construction. There have been no offers so far. 

Cons: The other unit is also vacant - guessing they don't want to set a precedent with the first unit. Apparently they got a mortgage on the 2 properties for 1.75 on the two (but they were their own contractors, so they've already made some money, yes?)

Their agent has said she doesn't think they'll below 1, and would just rent it out instead (which sounds crazy to me someone would rent a 4600 sq ft townhouse, but I might be ignorant).

If you were negotiating against yourself, how would you play this? Is the agent blowing me smoke, or do the numbers truly not make sense for them below 1? 

Any suggestions?