Best approach for making an offer to a bank REO.

[Mike Stahlman]

We are making an offer on a house. The house was listed as an REO for 79k and we made an offer after reviewing it of 35,200. The ARV would be around 120k. Prior to making this we reviewed the house and noticed it had basement wall cracks, and some leakage. We got a structural engineer to estimate the extent of the damage and then a basement contractor to bid the job. Which cam in at 17000 + 3000 to french drain the house etc. There are other repairs but mostly general rehab stuff 25-30k. After about a month the bank came back and rejected our offer plus one other someone else made at the same time stating that the offers were too low. Now a few weeks later the house is down to 69.900.

I think that for REOs they are just trying to hit a number or percentage but what approach works best for buying this type of house?  

Making a full offer, contingent on walk through?  Or low offer based on reality?  

If we make an offer based on actual repair costs, we could go up some but not a lot, and maybe they still will not consider the offer.  

I am wondering if it would be better to offer a full asking price offer now 69.900, contingent on partner approval, inspection, or something like that, then presenting our findings with estimates on the large repairs to back our actual number.

Looking for experience in this area.