You stated you are doing the sellers a favor.
Do you know the sellers?
If so you can not buy the property.
Aside from what you read below ask your agent to ask the listing agent what is going on exactly.
all we can do is guess.
Harold Sharpe - Broker
So Cal Homes Realty
California Department of Real Estate License # 01312992
Please see my blog for more info, advice and tips on getting a short sale approved
Thus to answer your question specifically, the owner (in consultation with his/her listing agent), not the bank negotiator selects the offer.
Personally, I work with 1 offer at a time and only submit 1 offer to the bank. I know people are out there overbidding for properties just to be in first position,,but ultimately the home has to appraise for the buyers' loan (if it's not a cash offer) The bank must accept a fair market value offer.
I suggest you bake some cookies for the listing agent and work with a Realtor that prepares a BPO for the listing agent to show that your offer is good and at a # that the bank will like, and that the home will appraise for, for you loan....that you're serious,,,loyal,,,and willing to stick it out through what could be a lengthy short sale process,,,up to 120days if necessary.
You can't lowball in this market UNLESS you can prove that the original list price of the property was out of whack.
P.S. Sign an addendum with the listing agent stating that ONLY your offer is submitted to the bank!
The seller is still the homeowner and the bank needs to approve the short sale. It is up to the homeowner and their realtor to pick the offer that nets the most to the bank within what they feel the home will appraise. Therefore even though they have an offer that is 25K more than listing price, if the buyer does not have the cash to close the gap between appraisal and what they offered it may not really be that great of an offer. Whenever you make an offer make sure your agent checks the comparables to see if you are offering at a minimum market value. Always Always write up your best and final offer so that you do not go through I could have offered more money scenario you are not always given the opportunity of a counter offer.
1) there is a deadline for all offers. At that time all offers are considered.
2) They are dealt with as they come in and the seller can accept one at any time
Now with a short sale things are a bit more complicated. If a short sale addendum is used the seller can continue to market the property until the offer is accepted by the bank. This is one of the frustrating aspects about a short sale. Especially when the bank takes 2 months to accept or reject. The Government HAFA program is designed to help the situation as is the new Residential Purchase Agreement (RPA). One of the goals of the HAFA program is to have banks respond within 10 days. An aspect of the new RPA is that people are working in good faith.