I think you are stuck. You might be able to be a back up offer.
The seller is still on title and she can sell to whomever she wants.
One note- there will be an appraisal by the lender granting the short sale. If the property is worth more, they will probably come back to the investor (although perhaps not).

IMHO asking to be a back up offer would be the best strategy, unless there are other investors.

Hello Knumom and thanks for your post.

Because a short sale is still, essentially, a sale between a home owner and a buyer, the seller of the condominium may choose any buyer he/she wants to buy the home, and the bank only approves the sale price and conditions. And, yes, it is normal and ordinary that only one offer is submitted to the bank in a short sale--multiple offers tend to confuse the banks, and a smart seller/listing agent will keep one or two offers waiting "in the wings" should the first buyer decide to cancel the contract or move on to another home.

In my opinion, the seller's desire to stay in the home as a renter is perfectly legitimate and, so long as the bank approves the sales price, the seller and buyer may certainly make a deal to allow the homeowner to stay in the home.

Although I understand how much you want this home, there is nothing that you can do as a buyer to approach the bank personally (you won't know what file it is, and, frankly, they won't talk with you) or to force the seller into selling this home to you. In fact, "pushing" is unlikely to yield any positive results other than frustration.

The best bet is to look at other homes and to keep your eye on this property. If the first buyer should lose interest in the property and it comes back on the market, you might be able to purchase the home at a later date. Also, if the bank decides to foreclose on the property, it can come back onto the market for sae later too. However, none of these options is likely to happen in the next 60-90 days, so if you're in a hurry to buy the property, I'm afraid that it will be impossible. If you do choose to make another offer on the home in the future, talk with your agent about creating an offer that addresses the current owners desire and needs to remain in the home--perhaps a leaseback for a short period of time to allow the owner to find another suitable location to live? Your Realtor should help guide you through the short sale process and negotiation.

Sorry, I could not give you better news on this one. Good luck in your home search!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA