This property remains actively marketed for sale. It is described as a 'fixer' and given that FHA lending has provisions for structural, safety, and other repair categories I doubt the trustee would consider an FHA loan with the risk of the house in 'as is' condition not qualifying for an FHA loan. This is especially true if a cash offer for less money would require no lender repairs. The cash offer is more appealing to a trustee, or even a conventional loan where lender repairs may still be an issue for the property in 'as is' condition. Lastly, FHA can be more intense of property requirements, especially of this age and when description includes the language 'fixer'.
However, 'don't ask, don't get' is a motto I incorporate when negotiating for my clients. Your present agent is best to represent your purchase intent in any event. I am a State Certified Residential Appraiser and FHA approved. I conduct FHA appraisals quite regularly. If your agent is familiar with FHA requirements, an inspection of the home to qualify any potential FHA 'hurdles' in advance of an offer intent might make sense. You can Google the 'FHA HUD Handbook 4150.2' too understand what the FHA HUD scope of property inspection makes as requirement to FHA approved appraisers.
On a lighter note, there are several properties in the Cottage Grove submarket that are priced from $100,000 to $130,000 (from which you may be able to negotiate a $120,000 acceptance).
If you goto the following website: http://www.HouseNow.com
And enter the following MLS #'s on the home page, property detail and pix, as well a map showing location, are available for your review.
Principal Broker - Founder
State Certified Residential Appraiser