If you really want the house and it is worth it then accept the counter. Keep in mind you are buying a home not playing a game... the house is "worth" what it is "worth"... Are you working with a real estate agent that understands buying bank owned homes? If so they should be able to perform a valuation of the property and tell you what the approx. value is... Sometimes you should pay OVER the list price and it actually happens quite often... sometimes you should pay WAY below asking... the ASKING price is really irrelevant... it just does not matter... what matters is what the house is really worth...

Hope that helps! If you are now under contract with an agent and have question about buying a bank owned or HUD home please feel free to contact me directly.

Best of luck to you!