A very interesting situation. Help with offer

[Kris Fox]

A REO is on the MLS in my area for $70,000. It needs about $50,000 in work and will have an ARV of $185,000. The house encroaches on the vacant lot owned by somebody else next door. This is public information available in the listing. I asked my realtor about making an offer and he told me there was already one person under contract plus a backup.

I contacted the owner of the vacant lot and I was able to get the lot under contract. I've had my realtor contact the listing agent to tell her that we have the lot under contract and she recognized that we now have the strongest position to go after buying the REO. It hasn't been explicitly stated that we will not grant any easements or variances on the lot, but it has been implied. She told me to make my offer. What should it be? How much leverage do I have in this situation.

CLIFFS: I have a contract on a piece of property that is encroached upon. The only way for anybody to do anything with the REO property is to own my lot. (This has been confirmed by my attorney). What should my offer on this property be?