I've got good news and bad news.
Bad news: Most short sales are uncertain and unpredictable. Even if it's a reasonable price, as you note, "anything is possible."
Good news: From what's posted, $209,900 could be a reasonable price. That's not just based on the so-called comps and apparent trends . . . which may or may not be accurate. Rather, that it was priced at $224,900 on October 26 and apparently got little or no interest so it was reduced to $209,900 on December 1. That's a good factor to suggest that the market value is probably a lot closer to $209,900 than to $224,900 . . . and it could be lower than that. It helps to establish that history--that it was for sale at a higher price, it didn't sell, and so the price was lowered. So if you offered $209,900, it'd be difficult for the lender to come to the conclusion that it's worth much more than that.
On the other hand, you say "I don't want to go in too low." That implies you're thinking of a lower offer. Now, that's OK--you can offer whatever you want. But don't assume that $209,900 is overpriced or that the real value is, say, $185,000. There's no way to tell that.
As Terry and Anna suggest, get your own agent. (Not the listing agent.) Have your agent run the comps. That'll tell you about how much the property is worth. And remember: the lender has access to the same comps. So you'd be safer offering something close to (slightly under) the comps. The lower you go, the riskier it gets.
Hope that helps.