It is best to make a non contengent cash offer before the bank starts reducing the price.
My advice is to contact a local agent who can represent you as your buyer's agent who can check the fair market value and give suggestion on price range to write an offer for this house. In that you will get a chance to get that home you like, have someone to protect you from the bad deal. Don't go alone or with the listing agent. Good luck!
Certified Short Sale Specialist