Questions re making an offer

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I'm planning to make an offer on a single family house that is way below the list price. This house is not in short sale or foreclosure. It does need a lot of work.

The agent said she's suggested a short sale to them, but they have not begun the process and are current with the mortgage. They have moved to another state. I'm making my offer tomorrow. The house has been on the market for several months, and there have been no offers, and I'm the third person to have even looked at it.

The contract papers offer a BUYER CANCELLATION at any time before receipt of a short sale agreement Notice from the seller.

I haven't seen anything of cancellation or withdrawal if the bank draws this out for a long time, and I find another house to purchase.
What is my protection there? How do I get out of it with my earnest money if the seller agrees, but the bank does not move on it? What contingency do I need to put in for that?

My offer will be way below listed price.
cash
no inspections
quick close
large (for me) earnest money 1-2% of offered price

The agent said there are no comps within the last 9 months. If that is correct, it would be based on size, probably. It's about 1900 sq ft, and that is large for the area, and for surrounding areas.

I haven't decided what to offer yet, as this will be owner occupied after the numerous repairs are completed. The list price is at least 25K more than what I think it would sell for if it were in good condition. It needs repair and remodel work inside and out. My uneducated guesstimate puts repair cost about 34K.

How do you determine a price to offer on a house you plan to live in?
thanks,
Ofgift