You need to have your own price in mind.

I have been shopping for REOs too. When I found one, I would calculate how much the price is lower than the fair market value, what's the monthly budget, what is the potential, then offer the price I feel comfortable.

In addition, I do not negotiate much. I give a low bow to test the water first. If the bank want to walk with me, I will provide the price I really want. Otherwise, walk away.

Do NOT listen to the realtors.

If there are already multiple offers there, I would not compete with them.