Why do banks do this?

Here is some backround about a home we put a bid on today....it was sold in May to the bank for 350000 through foreclosure. They put the house up this weekend for 123,000 even though it was appraised at 330,000. There is some damage but probably about 40,000 to repair. We bid 150,000. Why do banks put it so low when it is obviously worth so much much? Do you think 150000 is reasonable to bid or that it will get blown out of the water?