See if you can find yesterday's article in the San Jose Mercury called "No deal for anxious home buyers" It may help you understand the dynamics of both the foreclosure and short sale market these days.
Beth, it's a chance you will take. The same thing happened with a client of mine. We placed an offer a day too late. We waited for 2 months and then the first offer went through even though it was lower than ours. Of course my buyers were on pins and needles in hopes that the first offer would go elsewhere or back out. But that never happened. Good luck.