Customarily the price is determined by a combination of a formal appraisal and a BPO (Broker's Price Opinion). Most financial institutions will accept 95% of that figure.
Also you mention "the bank". There are financial institutions that have their own short sell departments, and those who contract out to third parties. The later usually takes longer.
Furthermore the listing agent may be dealing directly with "the bank", or using a short sell negotiator (best practice). The negotiator could be overworked with too many files. That is why the good short sell negotiators limit themselves to no more the thirty files/cases.
Hope this answers your question. Best regards - Bob Lepelletier - Broker - Associate - Keller Williams Realty - Alexandria/Kingstowne Office (703) 310-7880
It sounds like the LISTING PRICE was not determined nor approved by the Bank:
You should have your Agent do a CMA to determine the Market Value; it is probable that the Bank did.
4 months is not especially long; but it is cause for concern. What does the Listing Agent say?
What we are seeing, (all over) is the Bank asking Buyers for their "best and final" offer; rather than Countering.
Communications being what they are today, (poor), SILENCE is usually an answer.
The bank does not determine the asking price, the seller with advise from the listing agent determine a list price. The bank typically sends out someone to evaluate the home for fair market value and if they determine they want more they will ask for more. If they don't get what they think is reasonable they will not approve the short sale.
Hang in there in the world of short sales you have not been waiting an unreasonable length of time.