kel789 -- Fannie Mae (FM) wont be insulted. An offer that low will not get passed the asset manager (AM). If an offer of $170K is made on a list price of $210K you may find the AM will just reject the offer altogether. FM will wait for the monthly price reduction to get the purchase price down to $170K before shaving $40k off the current list price or even put the property into auction. But lets say for a moment that the list price on the property was $180K and you wanted to make an offer and you are willing to pay $170K. Remembering that it is always good to have a little flexibility in the final price that you will pay for a property. By flexibility i mean if you are willing to pay $170k don't loose the house for $2K -- $172k. Any way, in my example FM is at $180 and you are willing to pay $170: Submitt your offer at $165, FM will counter back at $180k. Stick to your price and counter back at $165k. This is were you will find out how good an AM you are working with and how much they want to sell the property. The AM will more then likely come down $1k to $179k, you counter back at $165 500. Again the AM will counter back and so the process continues, kind of like a tennis match. The AM may / should ask for "buyers highest and best offer". Hopefully you haven't increased your offer so much that you have hit your $170k price point, but as and when the AM asks for highest and best always make sure you are increase your offer slightly but try to be a little below your purchase price. The AM will again counter even though you have given your highest and best. This is when you come up to your purchase price, in this case the $170K, and again stating "Buyers final and best offer. At this point you have gone back and forth 3 or 4 times with FM and the AM has come down $4k to $5k off of the $180k. Putting FM at $175k and you at $170k. The AM at this time should submit the offer directly to FM for approval, showing that he/she negotiated you up as much as possible and that he/she has squeezed you for the highest purchase price. FM will more then likely come back with $172k as a final price -- u say yes and the house is yours. Of course there are a few variables that are completely out of your control 1) an asset manager who has no interest or cant be bothered, 2) the house itself has only been on the market a short while, 3) the properties purchase price is significantly higher then what the market will support. Remember that generally you are dealing with an AM that works for an outsourcer and not FM directly. If you are looking at purchasing a home as a primary residence FM is offering 3.5% towards closing costs. Just make sure it is written into your offer. They also offer a good mortgage program called "Homepath". I hope this helps a little, remembering there are to many variables to account for, but the above explanation does come from personal experience.