As in all real estate transactions a BUYER determines the price they are willing to pay and either the seller accepts it, rejects it or counters the price. Evidently, the Listing Agent determined that the current list price is what the "market price" should be. The REO bank has never seen the property and bases it's decision on both what the market will bring and how motivated they are to unload this asset from their balance sheet.
I would recommend you have a Pest Control/Termite Inspection done on the property prior to submitting an offer. The REO lender will not generally pay for the termite work, but you can ask for a credit or bake it into your offer. I can refer you to a termite inspector (local) that will bill his inspection to escrow -- so no out-of-pocket expenses to you. Bottom line... Any property you write an offer on better include a 10% anticipation in further price declines and remember YOU determine the final price you are willing to pay. I suggest you ignore the "sticker" price in today's uncertain market. Good luck!