it all depends on how much you want the home in question. If you're simply "fishing" for a bargain deal, then get aggressive. Keep in mind, however, that most of the time, you will NOT get the home. Occasionally and very very rarely, you'll find a bank that needs to simply dump the home and I hope you find that elusive home, however, in most cases, banks as well as private owners have to make a certain amount of money on the home in order to close their books or move to a new property.
The best way to determine the reasonable price "range" for the home is to work with your Real Estate professional in obtaining comparables for the property. You'll also need to get the property profile to see the indebtedness on the home. Remember, everyone wants a bargain, but if you really want the house, you'll need to be prepared to pay a fair market value for the home--not the bargain price.
If this is a short sale, for example, and everyone offers a very low amount to purchase the home, it may be in the bank's best interest to foreclose the property, spend a little money to renovate it, and then resell it on the open market. Many of the banks are doing that right now, which is why so many foreclosures are 'trickling", rather than flooding, the current real estate market. The bank does NOT have to accept a short sale, and if the BPO (a price evaluation completed by a real estate professional) shows that the home is worth more, then the bank will wait to get the higher offer.
Similarly, an REO property does not have to be sold at a bargain price as far as the bank is concerned. They may wait for a better offer. Only after quite some time, if the better offer does not come around, will the bank consider the "bargain basement" price.
Finally, keep in mind that in most areas around the country, we're still looking at a fairly robust home sales period. Buyers have been enticed by the $8K government stimulus, and will be out looking until at least November 2009. If you wish to be truly aggressive in te purchase price of a home, you may need to wait until buyers have left the market in order to exercise your buying power--and for now, that would appear to be after November 2009.
Good luck and work with your Realtor to appropriately price your offer.
Grace Morioka, SRES, e-Pro
Area Pro Realty