On market for a month, price drop, in a seller's market? Unless it went pending then the deal fell through (should show on the price history in Zillow), then something's up with this. Price too high, something undesirable about the property (high HOA, high insurance, ???).
Whatever the case may be, you apparently want a home few are interested in. And that's good. You have some room to negotiate. But tread carefully - get a thorough home inspection, title check (make sure there are no liens or unpaid property taxes), and read the seller's disclosures carefully (not sure if this is a thing in FL).
Unless you're really really in love with the house then I would make an offer with a contingency on selling your current place. If they're motivated then there's a good chance they'll accept the offer. If they don't accept it, well...you weren't in love with it anyway. C'est la vie.
If you're in love with the house, well, then it's worth it to you to pay more to make sure the deal happens. Don't know if there are any gotchas using a HELOC for a downpayment (the lending bank usually wants to know where funds for the down are coming from), so do your research on this. I would be inclined to just do less down with PMI just for the simplicity of it.