Hi Julie,
A short sale does not follow the pattern of a normal sale. In a normal sale, the property is put on the market at a list price. After an offer is accepted, the status in the MLS is marked as contingent and real estate agents generally don't show the property to other buyers. In order to have multiple offers, they would generally have to come in relatively close together in time. Unless there are multiple offers, a buyer could reasonably hope to purchase the property somewhere below list. The transaction moves along quickly and is governed by how long it takes the buyer to obtain financing. In a short sale, the property is put on the market at a drastically reduced price. Banks are aware that this is going to generate a lot of interest in the property and probably more than one offer. They take offers into consideration but continue to show and market the property. They are in no hurray to commit to a single offer and close. They often queue up several buyers for the property. Once this happens they don't care if they lose one or two due to their procrastination or ratcheting up the price. Preforeclosures, foreclosures and short sales are not always the bargains they often initially appear to be. They are only for the most iron-willed buyers. To have stuck it out this long, your will is far above that of the average buyer. I hope the deal stays together and you are able to close. I hope you you still find the property a good buy even after paying more than you initially thought you would be. However, in this market, buyers have tremendous negotiating power even for non-distressed properties. Prospective buyers should not limit their options by only considering preforeclosures, foreclosures and short sales.