But he told me he wants to get top dollar.How would you professionals in your wisdom and lessons learned over the years approach due diligence here to build a case for a counter-offer to stick with?

My offer is contingent upon full pro inspection.My Initial Offer: Purchase: $375,000 Down payment: $20,000 Interest Rate: 3% Amortization period: 30yrs; Balloon in 10yrs 6 month moratorium on 1st payment (to give me time to vacate and upgrade at least 1 unit)Sellers Counter Offer: Purchase: $395,000.0: Down payment: $60,000.00Interest Rate: 6% aprSeller to carry the balance of $335,000.00 amortized over 30 yrs.Balloon of full balance in 3 years option to extend 1 yr if needed.Monthly payment: $1675.00 interest onlyNo repairs.First payment due 45 days after the close of escrow.I am not working directly with the owner.

The counter offer came back in my price range.

(I'll assume that you're correct in stating that you've listed below market).Your counter offer can be as simple as "Your offer of $900K is rejected and my counter offer is $984K. 

We have a version of this in Massachusetts called "Notice of unsatisfactory inspection" and then respond with your counter offer in writing.

I did just that after an offer followed by a counter offer and a counter to the counter.

It's not there yet, but that quick thank you got him to start throwing out a counter offer. 

You should ask for a formal reject from the seller - this way you are assured that it was presented and as for a counter offer. 

And the good news is that I am finally starting to get more counter-offers now than I was 3 months ago.  

Hi,
I'm looking at a REO property (3fam) in a decent area B- C. I did a walkthrough of the property and put in an offer, the offer was declined.

I want to put an offer on the higher end but my agent told me it will...