well, the san jose retails at most around $700. and if you buy it from a bike shop they're obviously willing to work with you and go lower on the price. throw in the fact that the bike is over 5 years old and has almost 1000 miles on it (probably more).
I like it a lot and ride it (on the road exclusively) while often neglecting my geared bike. It is relaxed without feeling sluggish. Since I don't race it I couldn't comment on its abilities as an actual cross bike though.
The stock parts are pretty low quality. I have replaced everything over five years but the brakes, brake levers, frame and fork (after using them up or breaking them outright).