We would speculate your agent has examined the recently sold comps for "distress" sales in the general location of this home. This would provide an accurate portral of the price range that should be considered.
There are many more factors for consideration than "time on the market."
Our best advice is if you are serious about buying this home, keep your offer real, and ask you agent why he/she is recommending an offer of $120,000.
Bank is aware of value of home , does have file of pictures. Best to submit your top offer on home , bank may not respond if they dont like your contract submitted.
I have been on both sides of a short sale both as a seller's agent and a buyer's one. In my experience the Banks will look at all offers from the highest one to the lowest. They look at several factors to make a decision. I had one case where the "negotiator" decided for a lower than the highest offer we had. Having said that, if you offer at asking or above you will be in a better position. If the question you are asking is if the house is worth what they are asking then your Realtor should do a CMA and find out for you. If the Bank wants they have the power to put a "hold" on the foreclosure date. It has happened to me as well where the Bank stopped the process untill we got a final decision made on the offers. Hope this helps. Good luck.