A BPO is a broker's price opinion. The BPO asks for prices of recent sales and current competition. It's a lot like an appraisal but it's done by a real estate broker and not by an appraiser.
There are several questions you should know the answers to in order to proceed. First and most importantly - is this the best choice for you? How far off the asking price was your offer? Is the property worth what they are asking for it? What kind of condition is the property in (foreclosures usually sell 'as is')? What are other like kind properties are on the market and more importantly, at what price are like kind properties selling?
You may want to talk to (or hire) a buyers agent about what else is available in your marketplace if you decide that this is not your best choice or if the bank is not reasonable on the market value of the property.