The inventory is beginning to build lately in San Benito county even though it was much larger a year or two ago.
I always say you never know until you do it, it's hard to second guess the BANK or what they will take.
Finding the right local realtor is KEY they know the ins and outs of the area and things that might be very helpful to you in making that lower price.
Stats are beginning to show that the Short sale market is bringing up the price of homes Nationally about 29%. REO's go out lower but the Shorts sales are floating the REO or Bank owned up with them.
The condition of the property is KEY as well, REO's are not always well cared for meaning to you the buyer out of pocket for repairs if needed. That is why REO's go out less than a short sale.
Also finding the right local Realtor is KEY.....Oh I already said that
That said, Good luck Brian
If you don't have a buyer's agent working just for you in this transaction, I highly recommend that you find one. It costs you nothing, and offers you an advocate who is on your side, not an agent of the seller.