First, do a market analysis to see how that property compares with similar properties in that area. Second, take a look at the condition of the home. Ask yourself, "will it need extensive repairs or not?, Is it worth it?"

Remember banks or any other entity owning foreclosed propeties do not reject or accept offers soley based on the price offered. The financing terms, buyers ability, as well as closing date all factor in.

Never be afraid to make a justifed low offer 10, 30, or 40 percent below asking price. It is good to have sound reasoning for why you are offering such a price. Although no hard rules as to how low an offer a bank will accept exist, you can count on the bank doing their homework. Banks understand the market condition, and want to unload property hopefully with a good return.

The final point to remember is always understand your objective in a deal.

A safe bet for acceptance is a full price offer. On the other hand, if you have time, patience and an industrious agent, you may be able to fetch a bank-owned home for less than what is being asked.

It is most important, though, to do (or have your agent perform) solid research on comparables and market trends.

Mrs. Smith,
You know a great deal when you see it, if not, you need to look at more homes.

The last REO I bought was 224,900. We offered 225,000
I was told another buyer offered more, however we were a stronger buyer, 10K earnest, 50% down, and that is the reason the bank choose us.
The home appraised on our end for 10% more. It was on the market a total of 9 days.

The trend for banks is to price them to sell, get them done. Create multiple offers. Of course do the comps for the neighborhood, check the resale and new construction.

Good day & Good Luck

The best answer that I can give you is to do your research on the home, work with an agent that can do comparables for you...then make an offer that you feel comfortable with and that is still within a realistic realm. Although the banks take much longer to respond (in some cases), it has been my experience that they will counter back the same as home owners would. Currently homes are selling somewhere between 7-10% below the asking price on average. So hopefully that helps to give you a more concrete answer.
I would be happy to send you the current listings in the area if you'd like to email me privately and tell me your criteria.
Sincerely,
Nicole