Verbal offers are "suggestions", and will generate worse counteroffers. 

My question is; what should we counteroffer? 

What this data tells me is that if the property has been listed for 30 days or less the likelihood that you will receive a counteroffer is small. 

Go back to the signed purchase contract and the counter offers,  read all the typed lines in the instructions.

What if you asked $800k but received a $775k counteroffer?

AcquireAcquiring a property has many phases--meeting with sales people, looking at a whole range of properties, preparing an offering, responding to counter-offers, arranging financing, meeting with insurance agents, inspections, and actually closing a property.

If you want to put on your big girl pants make a counter offer to himTell him you will pay him off ONLY HIS principal and you will add that to the second and you put up the money to finish the project.See what he says when you make that offer.. this cold shed some light on it whether they are working you or not.If he readily accepts then you know your not in a very good spotBut really both of you made terrible decisions to make loans the way you have...

I have a house that is on day 10 with only a lowball offer that ultimately ghosted on the counteroffer.

Another thing to strongly consider is having your offer contingent on inspection so you have an idea of what you're getting into and make a counter offer.

You need to know your numbers that you are good with on the income, and debt and counter off that...