A home is only worth what the market is willing to pay for it. Be careful and fully examing a REO owned property before investing in it. I do not subscribe to the notion that the homes are listed close to there value....unless they are in move in pristine condition.
Take in to account the money required to repair the home. (Banks as far as I know do not inspect the homes and the agent that list them probably doesn't either..I say this because several of the homes I have looked at had no fixtures, copper pipe removed, flooded basements, ect...and no mention of this in the listing).
I have looked at 30 REO properties in the past 3 weeks. I would not have deemed one of them move in condition. While the asking price of the homes would have met the comps in the areas, the amount of work required to get them to even pass an FHA inspection would have turned a bargain into a money pit..
I just recently put an offer in for a home. I offered about 15% below the asking price. Why...the asking price was comped to the area, however, the furnace doesn't work, siding was missing on the outside, there was mold that had to be removed, many of the light fixtures were missing, ect. My agent said I didn't have a chance in hell. My opinion on my offer... I took the emotion out of it and if the bank does take my offer, I will make the needed repairs and the total cost I spent will be somewhere in the current asking price range.
My final summary...If the bank doesn't accept my offer, let the bank keep the home, or let another sucker who doesn't take the time to inspect a property buy it. I don't really consider an offer that takes into account items that need repaired to bring a home to comps in the area a "low" ball offer.