REO Price?
I put an offer on a REO that Fannie Mac has just taken back. I tried to short it with the bank. However the bank didn't to do anything because it was due to go to the court house steps in less than a week when I spoke with them. In good condition the house is worth between 120 and 130. I offered 75,000 as is and the house needs 14000 worth of work if everything is contracted out. I would look to live in it and do the majority of the work. If they say no, move on to the next house or counter for a few thousand more?
Thanks 
If you want to negotiate I would start by going up $5000 then up $3000 then up $1000 and a final offer. On your low end ARV estimate, that still nets $22,000. Since you plan to live in it, you can hopefully also have some appreciation and exclude your capital gains tax when you sell!
GOOD LUCK