Most sellers are motivated at this time and willing to negotiate. Is the home worth the asking price?
You need a good agent to assist you. We are currently in a buyer's market so yes, if you love the house, and the price is right it is a good time for you!

If they just dropped the property 20% its obvious that your market is in trouble, especially on the high end. If you plan to live in the place for a long time, maybe it could be right for you to buy but expect to lose probably another 20% on your house in the next 2-4 years, then in probalby 7, be back to where you bought it in real terms, maybe longer.

No
Think about buying in 2010. But, if you have the kind of money, where a half million doesn't make much difference, you're probably ok. Maybe read the newspaper internet headlines, see whats happening with the economy, then decide. In my opinion, housing prices will drop much more.

The crystal ball says....

Yup - thats what I thought. You may be in a great market: Venice California can't be a bad investment - HOWEVER!! Do your homework, get an agent. Do a comparative analysis. How long are you planning on occupying this unit. Are you able to make the payments - consistently without pain in the pocketbook syndrome?

Take time - unless the market returns to the "waiting lists" of the past you have time to investigate all angles.

Good luck!

Others have given good suggestions (checking comps, getting an appraisal).

As far as a decision,I always advise clients to pray to find out if this is the right home for their family. A couple of questions to ask yourself: 1) Is this what you've wanted/dreamed of? 2) Is it within your budget? 3) How likely is it a similar opportunity will come along like this again? 4) Is there anything else your "gut" is telling you about this place/opportunity?
A 20% price reduction is very significant, at all price points. Do check out the builder, construction co., etc. thru BBB and CA Contractor's Licensing Board.

As far as timing, interest rates are low, and if the property meets your personal criteria above, the question is are you more afraid you'll get it or not get it? If you miss out, will you always compare the following homes to this one?

You might want to order an appraisal if you aren't using an agent.
ps. Hey Cecil, where is your head? :)

It truly depends on the area you are considering since lot of areas have experienced a reduction in value based on the rapid appreciation and boom of 2003-2004 and early parts of 2005. Need to analyze the recent sales and also what other properties are listed for since this recently has been a driving force for a lot of buyers to determine what they will offer based on competition and not on past history of recorded sales. As a buyer- the ball and momentum has come to you and you are in the drivers seat but be aware of falling prices since it still appears that the bottom has not been hit on recent market value drops on a lot of area of the country. Good luck