With any offer have your agent show you the recent closed comparable sales in the area. As for the market trending downward. With the incentives for new home buyers there are more buyers making offers. In addition, southern Oregon is known for having a hot real estate market in these months. The best homes are usually on the market now demanding top price. But a good agent will guide you with CLOSED SALES comparable to the home you are considering. Best of luck and good house hunting :)

To get an offer on a short sale is a short sale accepted requires two things.
Step one...the seller must qualify. If they have assets, no hardship that caused the default, or are uncooperative, it doesn't matter what you offer if it is short of the note.
Step two....a general mathematical equation of the loan amount, Value of the house as determined by either an appraiser or Realtor doing a BPO, and whether the bank feels it would lose less money by spending the $20k to foreclose and then sell it as an REO...or buy accepting the offer.

It takes a good Realtor to give advice to a buyer...but more importantly who deals with the bank, generally the listing agent needs to be savy.

My general advice would be to be extra patient if putting an offer in on a short sale, know the hardship, and know the value...
Or better yet...shop the REO market....as good or better deals...less unknown factors...and only 2 parties involved instead of the three required for a short sale.

With a short sale your working with the home owner and the lender, best to wait for the home to go back to the bank and then you only have the bank to deal with. Most short sales take longer and may not get you any where. As you said the market is still going down in most areas, so work with the bank as they don't want them, but neither way the bank will only sell the home as is, no repairs done, so make sure the home is in good enough condition get a new loan on it. Good luck. And get an agent that knows their stuff about short sales and/or REO.