As a Realtor that handles short sales, I will tell you that they are a huge headache. If I were in your shoes, I would have moved on 6 weeks ago. Good luck.

I do have a buyers agent and we are both frustrated to the point of wanting to withdraw the offer. I'd have done that quite a while ago except the home is selling for $100k less than it sold for in 2006. My wife and I really like the home but were thinking we can withdaw our offer and pick up the home at the county auction next month.

I certainly do not presume to know the situation however the type of relationship the listing agent has with their seller can determine the information you receive. If you are working direct you should have received disclosure telling you how you will be treated in regards to the transaction. This can have a big impact on what the listing agent is obligated to share with you. There is no protocol for short sales and they generally do take quite a bit of effort and time. Knowing the statutes of time when dealing with the foreclosure process can save you a lot of time and energy in making sure that the property can actually be sold. I have experienced a bank foreclosing on a property while a short sale was being negotiated. I highly recommend speaking with someone to be a buyer’s agent who is looking out for your interests. I have attached a link with some useful information.

Unfortunately when it comes to short sales you are very limited and having a second lien holder involved only complicates matters. I think the listing agent needs to present the short sale package to the new lien holder and see what happens. Please understand that short sales can take a long time and you must be patient. I don't think they will get the loan back, but I'm sure they will entertain your offer. If you're being represented by a Realtor, I would make sure they stay on top of the situation. Hopefully all the real estate agents involved have experience with short sales.