Who told you that you cannot get an FHA 203k loan on a foreclosure. My real estate company sells almost exclusively foreclosures and I know for a fact that many of the FHA buyers get a 203k loan, otherwise, they could not get financing. As far as what to offer, your realtor should be helping you with this, that is what they are there for. We have not seen the house, so we cannot even suggest what a good offer might be. Foreclosures are not for everyone, but if you go into this fully aware that the house needs work and that foreclosures are priced very low b/c they do need work, you are ahead of the game. A lot of people think banks HAVE TO fix everything if they want to sell the house. This is not true. They may fix some things on your list and not others.. It never hurts to ask.
Licensed Real Estate Broker