There is some great advice below, however, the best advice is utilizing a seasoned agent in an instance like this. Make sure they do a complete market analysis of the property and also homes in the surrounding area. REO's are Buyer beware and you'll want as much knowledge and insight on your side going into this type of transaction. Also, be sure you have your financing in place and solid before you even start the process.
Thanks, Tood Norsted
I would have to agree with Todd. There are lots of problems that can come up when dealing with banks as most of them require that you use their purchase agreements....many of which can be very tricky and very one-sided. Use an experienced agent and potentially have an attorney review any addendums the bank sends back to you. Experience can help protect you from costly mistakes and help you take advantage of some really great deals.
If you decide to do it on your own you are costing yourself a lot of money. A Realtor exclusively representing you will save you a lot of $$$$$ on an REO or Short-Sale transaction. Oh, and did I mention it is FREE to use a Realtor to represent you when you buy a home. Thanks!
The best way to know what price you should offer is to know what other comparable homes are selling for in the area. There are a couple of questions that I would have in your position: Do I have a good sense of what other similar homes are selling for in the neighborhood? Do I have a good handle on what, if any, work is needed on this home? If similar homes in that neighborhood are selling for $200,000 but this home needs about $10,000 in repairs, you need to take that into account.
Good luck and please let me know if you need additional information.
What market are you looking to buy in?