That's why, in the state of California, we have a short sale addendum wherein we specify that the buyer's offer is good through a certain period of time, that the escrow isn't opened until formal acceptance (in writing) by the short sale lenders, and that the buyer's initial deposit will not be cashed until receipt of such approval.
Until the offer is accepted/approved by the short sale lenders, there's no guarantee the sale will move forward. A short sale is made doubly harder and more challenging when there is more than one loan, and when there is more than one lender.
So yes, the buyer should explore other avenues and look at other properties to buy just in case. As such, the buyer may write an offer on another property.
If, however, that short sale is ratified by the short sale lender within the time specified by the buyer, the buyer should do the right thing: if the buyer is no longer interested in the property, or if the buyer has an accepted offer on another property, the buyer should officially withdraw his offer.
Throughout the process, your agent should follow up with the listing agent(s) to find out the status of your offer(s).
I am working with a client who wrote two offers on short sales and one on an REO within days. I asked her to be very clear that she would accept the first home that accepted her offer. In this case the REO quickly had higher offers than she was willing to make, so that left the two short sales, both of which had been accepted by the seller. She had a favorite, but would have been happy with either. Then a higher offer came in for one, leaving her offer still pending on (thankfully) her favorite of those two. That offer was written 12/23. We received verbal acceptance from the bank's negotiator about three weeks later, but are still waiting for acceptance in writing.
Keep looking, and writing offers.
This is really a situation that is specific to each individual situation. I would say that a lot depends on how experienced the listing agent is. Most deals fall apart because one or both of the agents don't know what they're doing in short sales. I would talk to your agent directly.
The bottom line is the home sellers have accepted your offer but that really doesn't mean squat. It only the first step to get things going. The lender can take anywhere from 30 days to 6 months to approve your offer. So your answer really depends on how much you like the home and how long your willing to wait. If you need to move by a particular time, then it might be wise to put offers in on other homes that ARE NOT short sales.
You can withdraw your offer virtually anytime on a short sale. As long as you don't keep doing it over and over, it really doesn't display 'bad faith', it's you doing what needs to be done for your best interest.
Hope this helps. Good luck!
If the Listing Agent is an experienced Short Sale listing agent then you should be somewhat comfortable with the situation. Most of them have two loans anyway so if you start all over with another one you will be in the same situation with a different house.
I have worked with several short sales from both the listing and buying side. Having two loans on the property does make it just a tad bit more difficult but the time frame is pretty much the same. You should ask your Realtor to keep in touch with the listing agent to make sure the file is in progress. On the buying end, I've told my clients to hang in there when I know the short sale is being handled correctly and they have been rewarded for their patience with a home they love. Hope it works out well for you too...just hang in there :)
The question you pose is one of the confouding issues in today's market. Does a buyer write an offer on a good short sale or wait for a good foreclosure or regular sale? If a short sale is good then do we just sit and wait while the powers that be decide to grace you and the sellers with a transaction or do you undermine your agent and offer and continue to take stabs at other homes, keeping this one in primary/backup insurance? Even the best short sale agents have a 30% change of failure.
Considering all the variables and that I am a licensed agent NOT in your transaction, I think good faith means giving the listing agent a change to get the short sale approved before moving on to plan B. The problem then is how long is reasonable? With B of A taking on average 4-6 months for an approval is THAT reasonable, probably not.
Good faith means just that. Trust your gut and your agetns advice and do what is best for you. That's what the banks and the distressed owners are doing, and I'd say the banks don't care much about...(Fill in the blank, there are many endings to this sentence.)