I am a realtor in North Vernon, IN. This is a great question! My husband & I (we own Century 21) have a home for sale in town, our former personal residence, that is almost 1600 sq. ft. At the price of $80K, that makes it $50/sq. ft. If you are really interested in making an offer on the 1200 sq. ft. house, make one that seems reasonable, something you can afford, but not insulting to the current owner. If you aren't aware of their situation, they make be very willing to negotiate quite a bit. Are you currently working with a realtor? If not, e-mail me at firstname.lastname@example.org. I have a meeting this morning, at the office, then the Muscatatuck Board of Realtors Meeting at Noon.