Best strategy for buying a foreclosure..according to the bank or experience.?

The location of the house is wonderful for my family, the street looks straight out of a Norman Rockwell painting, and it is big enough for my family’s needs now and in the future….but it’s a foreclosure.

Everything on that street is picture perfect, except the house for sale. The siding looks like compressed particle board and it’s puffy, and rotted through in several places, the roof appears to have major issues and visible water damage inside the attic, the inside was trashed by previous people, holes in walls, kitchen hardware gone, not a showerhead or lighting fixture in the house, paint puddles on the rugs, they even took the backsplash off the wall! Okay you get the picture, it’s a dump…but don’t they say location is everything?

So, in 2002 the house sold in foreclosure for 144K, in 2008 the house sold in foreclosure for 144K, in 2012 the house was “deed taken in lieu of foreclosure” and it’s now 2014 and the house is listed for 139K. The house is one of the biggest on the block, but the comps for the neighborhood show the houses go for 120-170K.

So, my question…does the bank that holds the property actually understand that the house has gone through 3 foreclosures and that it is in REALLY rough shape, or do they honestly think they will get close to the 139K they are asking? Also, what is the best way to put an offer in for this house? I was thinking I could do a low offer like 75K and write a letter letting them know that the house is in rough shape and I wasn’t looking to make a buck on them, just that no one will offer 140 and then have to put 70K worth of work into the house, it will be priced out of the neighborhood…and I REALLY love that neighborhood and would be happy to pay the 75K and then put in 70K of work for a decent house, but how do you say all that?

So advice?