Re: Should we wait??
There is no harm in putting in an offer on a house that is lower than the asking price. In the current climate, houses are falling in price and to put an offer on the table, just means it will stay there. If the seller is in a chain, they may need to sell, and you could get a bargain, if you call it that. If they are not, at least your offer is there if should ever fall to the level that you are looking for. Be prepared that houses may fall a lot lower though, and if you buy, dont look back, as it will only give you a sore neck.
On the approval side, go for the approval anyhow. It wouldnt hurt having bank approval there, as you never know how tight the banks will get on their lending criteria in the near future. Even if you look at another house, the fact that you already got approved gives you higher ground to deal with the banks in the future.
Finally, I think that there are other really good bargains out there at the moment (look around), and they should only get better. Some people may let their houses go at way below asking price for numerous reasons, and you could make the gain, albeit at their expense. I only say that, as I have been trying to sell for two years, and believe me it is a buyers market in relative terms.