I will say some lien holders can take upwards of 10 months before the give a commitment letter to short sale the home which is what you are waiting for. Hopefully the listing agent that is working with the banks has experience otherwise you could be sitting tight for some time. If you want to close faster on a new home look at REO/foreclosure homes or owner occupied/vacant resales.
I have processed dozens of short sales on the listing side and I can assure you that no two are alike. The average short sale can take 4-5 months from contract to settlement, with some taking up to a year. These transactions are not for the buyer who "must move within a specific time frame". Short sales can often provide the buyer with significant savings orver that of a traditional resale, but the buyer must be prepared to wait as a trade off.
An agent for the buyer should contact the listing agent of the property before the offer is written to determine the best course of action when writting an offer. The listing agent should be able to provide the buyers agent with some insight on timelines, etc.
In general the process is the same for all banks, while the systems are different from bank to bank and transaction to transaction. Once the bank receives the short sale package which can consist of more than 100 pages prepared by the listing agent, it is assigned to a customer service employee of the sellers mortgage company, who will in turn verify the contents of the package to ensure all of the required documentation is in place. It then goes to the next phaze where a valuation of the property is ordered and the sellers hardship and financial information is vetted. At this point it is assigned to a negotiator who is also handling hundreds of these files at a time. If the offer meets the fundamentals of the valuation, the negotiator will inform the investor for the mortgage who makes the final decision, and an approval is generated.
As you can see there are lots of "hands in the pot" and if the offer were to be altered, ie a change in closing costs, the process could be delayed while the appropriate paperwork was reorganized to reflect the change. If there is a second or third lien, these could be processed in the same manor, simultaniously.
If a buyer does decide to "jump off the contract" and move to another home, I would highly recommend doing so after speaking to an attorney to enure there is no future liability.
There really is no normal time for short sales. It depends on so many things, like is the seller responding quickly to the request for information, who is doing the negotiating with the mortgage company for the seller,
What is your agent saying the listing agent is saying.
I am going to answer your other question about about changing the offer after it becomes a contract.
Once the offer is a contract, it is presumed that all issues have been negotiated and all parties agree, which makes it a contract.
Since it is a short sale, that is what is being negotiated with the seller's mortgage company, so my guess would be that if you wanted to change the "contract" you would have to do a new contract and the negotiations would start all over.
Your agent should be able to answer this question more directly by asking the listing agent to ask if the mortgage company would consider a change for closing costs.
Everything gets more complicated because it is a short sale and the mortgage company is involved.
I hope this information helps.