Negotiate within reason- Most assume that the Banks will come down drastically on a foreclosure but they have had many BPO's and some have done appraisals to determine fair market value and so most Banks are pricing these homes well. Many people think that they will drop the price drastically but that is not likely. Most likely thet will reduce the price incrementally every month that the home is on the market and remains unsold.If you have reasonable expectations you can usually make a deal!
I have noticed with my Buyers that Fannie Mae will negotiate with the original buyer until a reasonable agreement on price has been made before moving to the next buyer.
Have your agent find out if there are any other Buyers. If there are none then Fannie Mae will probably continue the negotiations until they have come to their bottom line. You will notice when they have hit their bottom line when they stop countering you and let you know this is it, take it or leave it.
Good luck with your home purchase!
In my opinion you should counter to what would make you happy, if they reject it you can accept their original counter. If...they have not acepted another offer within that time.
Samantha first ask the listing agent if there are any other offers. If so you can risk it or take it, you also need to assess what the house is worth in todays market and see if if that counter is below market value of above. Fannie will not negotiate down to teh last penny with you, you will end up losing it. It is up to you how much you like or want it. you should have you agent guiide you through the process.
I would treat the negotiation just like any other. Fannie Mae really doesn't want to own these houses, so come up with what you think is reasonable, and give it a try. Unless you are competing against other offers, you might be able to try again later if it is rejected. Good Luck!