T - that really depends on what the house's fair market value (FMV) is assuming the flooring was there. If the house had a fair market value of $150,000 and flooring would cost $25,000 to install, then offering $35K probably isn't going to fly. If the FMV is $100,000 and needs $25,000 to install the floor, then $35,000 is still a low offer.
Banks know the fair market value, they know the condition and have estimates of repairs, and they recognize a buyer will want some level of ROI (return on investment) on what they put into the property.
You need to know the FMV of the house, and you need a realistic repair estimate. The asset managers see quotes for repairs all day long, so if you come in and say that the repair costs are $25,000 when truthfully you can get it done for $10,000 then the bank is likely to reject your offers. I've seen plenty of quotes recently for repairs on foreclosed properties that are ridiculously overpriced in an effort to get the bank to accept a low offer, which they reject. The bank has property preservation companies that have been to the property and documented the condition and provided repair estimates, they've had Realtors that have been to the property and done the same.
So to sum it up, if:
FMV - (Repairs x ROI) = $35,000
then make the offer, and be able to back up your numbers and include that in the offer. If the number is a lot higher then $35,000 then you're probably wasting everyones time in making an offer. That being said, if you have a Realtor, and want to make an offer, we have to present all offers.