Equally a probate sale gives you more wriggle room. They are trying to maximise the value but have a time scale that a normal private seller might not. They may be happy to negotiate over the summer, but with a view to having sold before the cold weather comes - you don't want to have to deal with an empty house (potentially away from where you live) over the winter.
If you are interested take a builder round to give ball park figures for what is visible now. If that seems reasonable then go for a survey to try and cost up unforseen stuff. If you need a mortgage then you will have to have the survey anyway before they will give you the money. At that point you finally decide what you are willing (and able) to pay - then you make a firm offer (lower than you final price) and see how they react. Seems reasonable to tell the vendors that would be your likely path. If there are others around willing to pay more than you - then fine - they would pay more and you wouldn't get it anyway.
By the way - I know this from the other side having recently gone through selling my mum's house.
Sorry i think that house is just too expensive for you. Given it's age and lack of maintainence I think you could be looking at a massive amount of work and at the end of it you'll have a pretty but small house in presumably a nice location.
From the fact that it has generated quite a bit of interest as well as offers within days of going on the market, I would say that deducting the cost of renovations from the asking price is probably an overly optimistic strategy. Saying that, you never know unless you try! You might get lucky and everyone else is not actually proceedable.