This may be a late answer for your strategic planning, Dustin, but please be aware there are funds available through the NSP for rehabbing foreclosures, as well as the $8K tax credit. Good Luck in whatever you decide.

I want to thank everyone for their advice, it is great to hear what the "pro's" think since you deal with these questions day in and day out. The house is in move in condition, it is just very outdated. The 70K would go towards updating the home with higher end material and building a garage and any other rennovations that it may need. I believe at that point it may bring $450K in today's market. I am planning on living at the property for at least 2 years. I am going to offer the $240K with an agent who showed me the property and see what happens. Since there are no other offers on the property at this point I am optimistic. I am also putting down 20% and asking to close in 30 days. I believe the bank may be more willing to deal with those terms??? Any additional advice will be greatly appreciated!

In our area, the banks ( & they are from anywhere not local) want fair market value on the homes. They get many Broker's Price Opinions and then the listing agent independently will set a price. There is no stealing going on , you will probably pay what someone else would also pay. If the property is priced low we see multiple offers, too high and they sit. Everyone pricing has their own strategy to get fair market value. Buyers gravitate towards these even though they may be able to get a move in ready home for an excellent price. The banks seem to be in no hurry to sell fast or sell low- in some cases there was a mortgage insurance policy on the home which helps them in recovering some of those monies - that may contribute.
Work through a buyer's agent - there is no charge to you - it only makes sense to have someone represent your best interest.

I would love to talk with you and give you advice on the banks and REO companies ratio and pricing straqtergies. We have been very succesful in winning bids for our clients and like most deals you have ti understand who you are negotiating with and their mind set. Please feel free to contact me directly.

You need to get an appraisal. Also, besides the appraisal and repairs, you'll need to consider your exit strategy (ie you intend to rent, flip, or live in this property). Your answer will determine whether or not you need to further adjust your offer price.

Dustin,

The bank will take what the bank will take. You never get anything you don't ask for.

The tax assessed value is worthless. You should not be using that for anything.

What does your agent suggest? Have they called the listing agent to find out if there are other bidders on the home?

If there's no offer, it won't hurt to throw you offer up there. $240K on a listed price of $300K is only a 20% discount. If the home is worth 400K - the 80K, then you should be getting more than that of a discount.

My guess though is that if it needs 80K worth of work, then you've got a house that's completely uninhabitable for a while. 80K IS A LOT OF WORK!

Hopefully your agent can help - no one else can answer that "WHAT IF" question for you.