You can give any offer you want and the agent may not respond right away. I experienced this when I bought my home this summer and the agent's actions cost the bank an additional $45k. My offer was ignored even though our credit scores were both over 800, we have more than 20% down, and it was actually higher than the one accepted (we found out through another agent in their office). When that deal fell through due to financing issues, they did not call us back and it ended up going through auction (this is a bank owned auction, not foreclosure auction). We ended up getting the home for $45k less than our last offer ($385k final price). The selling agent chose the other offer because it was her client (both sides of the commission). There would be no other reason for it since we were the stronger candidate with a higher offer. You will experience this from certain agents who are getting desperate to squeeze every last dollar from every sale since the boom they helped create burst on them too. To be honest, I don't even think the bank was shown our offer since they didn't recognize the fact that we (the auction winners) were the highest offer they received during the regular MLS sales process. Also, not all excellent deal foreclosures are run down. Ours was built in 2005 and everything was in great shape and originally sold for over $600k when built brand new.
Here's one techique to know what is a good price (where's the bottom). For my home, comparable homes built in 2001 were sold for around $350k. This was a year or two before the market started to explode. I feel comfortable that homes will not dip below that amount. You should see what your home would've sold for in 2001/2002 and if it's almost down that low, you will be safe. 2003-2004 prices would be cutting it close and 2005-2006 prices would be unrealistic to consider buying.
Now, as for how low you can go... It's more important to say how HIGH can YOU afford to go. When purchasing out home, we decided on what rental values were, what we needed in a house and what we were willing to pay per month regardless of market value. The following should help you make this decision.
What would that property rent for and what are the taxes? There is a simple calculation you should make to ensure that even if prices go lower, you will not be one of statistics that can't afford their homes.
Take the amount of the home, assume you will get a home loan for 100% of the value and for every $100k, multiple by $600 and that will be your approximate monthly cost + taxes. If the market rent is higher than that, then you have a good deal. If not, why bother BUYING, when renting would be more financially responsible. Don't buy into the "but you will build equity" speech. That's how people got into this mess. Would you rather spend $2000 in a home loan SLOWLY building equity (assuming prices remain stable) or $1,500 / mt on rent where you SAVE $500 (CASH equity) per month?
Example for what you are looking at. $250k value (let's assume that won't budge).
2.5 * $600 = $1500/mt
Taxes (assuming around 3%, which is high) = $7,400/mt = $600/mt
Insurance = $480/yr = $40/mt
Total Cost of ownership = $2,140 (Not including maintenance / repairs)
I don't include utilities since you pay that regardless of renting or owning.
So if the market rent for that home is MORE than $2,140, then go for it since you can always rent it for more than you're paying for it. If not, then you need to consider if it is worth the premium of OWNING vs. letting someone else be responsible for major repairs (roof, driveway, boiler, HVAC, etc.).
While you do get a "tax credit" for the loan interest and taxes, considering that you would be paying $24k/yr, since you're married, it would be only $13k in benefits since the standard deduction is ~$11k. The exception is if you have a lot of itemized deductions. From what I know, Florida has no income tax to deduct, so you would be limited to sales tax and very specific expenses for itemization. You also have to consider the tax bracket you are in. I will just ASSUME (since I have nothing to go by other than the price range of the home you are looking at) that your household income is around $60k/yr. At that rate, you are in the ~15% tax bracket. At MOST, you would save $320 in tax benefits. That would be only if you already have $11k in OTHER itemized deductions.
I frown upon using that tax credit to justify a purchase because if you decide to rent it out, you no longer get those tax benefits and you will end up paying more than what you're getting for rent.
I hope I was clear enough and this helps you make a decision. Whatever you do, I wish you and your wife have a happy life together no matter where you call home.