Confused on bidding on VA owned property

[Kevin Scherba]

I am interested in this property that is foreclosed on by the VA. Original list price was $549,900 the price dropped to $522,500 and again to $495,000. Both price drops are approximately 5% of the original list price. .I just found out about the 89% rule after I submitted an offer on the property for $400,000 which netted a counter offer of $491,000 and then $415,000 which netted a counted of $484,000. I advised the agent I was going to hold at $415,000 for the time being. The counter offers were approximately 1% and 1.25% less. The $484,000 they countered with is 88% of the original list. My confusion is the property has been on the market for 103 days to date. Does the 88% rule not apply to the price reductions? If I wait for 120 days, im projecting the price drop is going to be $467,500 as all the other drops are 5% for a total of 15% of the list price. How do I go about offering on the property if this happens, do I go with 88% of the $467,500? Any advice would be appreciated, first time looking to purchase a foreclosure and will be owner occupied. The seller is firm with no repairs at any time.