You can make any offer that you wish. My experience has been that FHA is waiting for and getting closer to their asking price lately. They have not been accepting low offers as readily as they did as recently as a year ago. That doesn't mean they won't take anything less than 120,000. If you are truly interested in the land, make an offer. The worst thing that can happen is that they say no, but they may counter at a number that you find appealing. If you want or need any advise on the FHA process, feel free to contact me.