First time home buyer trying to buy a foreclosure; I have a question about the seller/bank?

My husband and I found a great little home that we would love to purchase. It is a foreclosure and has been on the market for almost six months with only one low offer. The house itself is not in great shape. It needs a lot of cosmetic work; paint, new flooring, new appliances, new doors both inside and out,... show more My husband and I found a great little home that we would love to purchase. It is a foreclosure and has been on the market for almost six months with only one low offer.

The house itself is not in great shape. It needs a lot of cosmetic work; paint, new flooring, new appliances, new doors both inside and out, new molding, and it is dirty! But it is in a great neighborhood with great schools and if you can see past the grime, it is a real gem.

We put in an offer and if you look at the neighborhood and what the other homes are selling for, it is a low offer. But we thought it was fair because of the condition of the house. The bank came back and agreed to pay our closing costs and to warranty the house but they want our max bid. They said our offer was a little low. They did not counter our offer and they did not say no to our offer, they just want us to offer a little more money. Per the listing agent, there are no other offers on the house.

Has anyone had an experience where the bank doesn't counter just asks for more money? And if so, how much more money should I offer? Is it possible that the bank does not know the condition of the house?

Thanks for reading this long question =)
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