Since it is a buyer's market now, the most logical way is to make an offer based on appraisal value.

Appraisal value is derived from comparing similar properties recently sold in the same area within past 6 months. You can obtain estimated instant valuation at Zillows and Yahoo, here's the links:

www.zillow.com
realestate.yahoo.com/Homevalues

Depending on how much you like the house and number of bids on the property, you can consult with your agent on how much to offer since you are now educated about the true value of the property.