reasonable offers in the luxury market

look at recent sales, break out finishes/amenities/size of house/distance to beach/distance to village/view/waterfront/etc. make your offer based on those #s and go for it.

Unwise to work backwards, what if it's grossly overpriced or has asking from 2008?

Otherwise anything within 10% is always reasonable. Between 10% and 20% is bargain hunting. More than 20% requires some prepping and oiling up the broker and indirectly getting feedback on whether or not to formally offer.
If you offer is say 25/30% less, it means you have a couple comps in your pocket, or some issues (dated bathrooms,kitchen,etc) and the broker can tell you, "doesn't hurt to put an offer" or may tell you "they won't go for it."

Again, ignore the asking price and offer a price based on comps.

I offered $1.75m for a new construction house that was asking $2.495m. The selling broker laughed at us and was really rude.

A year later, they lowered the price to $1.995m and then another 6 months went by before it closed at $1.85m.

18 months of an empty house for the owners.

can you use asking prices for houses for sale on the same block as comprables even if they havent sold? ie: if the house your interested in is asking 500k-700k more than neighboring houses offered for sale on similar acreage and sq ft house?

By all means. But if they're asking that much more than direct comps on the same block then they're not serious sellers so I wouldn't waste your time submitting an offer.

I had a broker tell me he thought my 6 bedroom 4 full baths, 2 half bath 5 year old house just at the edge of East Hampton village on 1.5 acres was worth at most 1.8MM. It was appraised at 3.2MM in Spring 2007. Huh? He based his numbers on asking prices of houses near mine. Those houses are much smaller, older and in need of renovation or updating.

one thing i will say to that LCNY which i have always been told by real estate professionals is "you never want to be the nicest house on the block." what i take from that is if all your neighboring houses are small and old and than if you build a beautiful updated house right smack in the middle, you might have a harder time trying to get a maximized return on your investment. But by the same token your post is exactly why i am confused as to how to make offers on luxury real estate in the hamptons- everything seems to be based on the opinion of a "somebody" and i can't seem to find a standard market trend out there these days. Fortunately i am a buyer but i would not want to be a seller in the market out east today..

lcny, your observation brings several points to mind. first, what do you think it is worth, or said otherwise, if you were in the market today, what would you pay for it? second, i'm curious if it was the same appraiser. while appraisals are nothing more than 'opinions', banks do rely on them to determine what financing they will provide. this underscores one of the problems in the second home market today, namely, lack of leverage. lenders that i have met with locally have required that i put between 35% - 50% down, based on the value of the home! while i have the money to do so, i am reluctant since it seems to better ways to invest these monies than buying a second home (especially if mortgage interest deduction is further limited or eliminated altogether). bottom line is that these changed lending requirements further limit the number of qualified buyers for property! enjoy your home - hamptons are a beautiful place - though, i enjoyed my time out there in the early 80s much more than today when it was less crowded and less elitist.