I admire Elizabeth's optimism that it is a small chance that she will get burned again. I don't agree with that assessment. IMHO, even a small chance of losing the deal is a great risk after you have spent money on an appraisal, whole house inspection, and other due diligence costs.
I generally advise against offering on short sales. Most of them are hoodwink sham against the buyer, seller, and agents. A bunch of wasted effort and wasted appraisal and inspection fees is the usual result. There is a chance, -= A SMALL CHANCE - that a short sale will actually go through. The more probable route is that it will not be forestalled long enough, that it will go to REO and be marketed as an REO within a few months or a few weeks.
My research tells me that only about 1 in 12 short sale listings (Year 2007) became closed short sales. That means 11 failures to every success story.
I boldly predict that will improve substantially this year to a failure rate of only 70 to 80%. That would be a huge improvement in the success rate, yet it still leaves me wary.
You don't mention if your offer is already accepted. Contractually, if your offer was not accepted in 3 days, you're already out of contract anyway, so even though you're still interested, it doesn't mean you're being considered. If it was accepted, I might still ask for a 'specific power of attorney' document, signed by the bank authority, stating that they are authorized to act for the bank in your sales transaction. The reason I say that is I have had the experience whereby we had already signed the documents for the loan and had recorded simultaneously to the house being put on the auction steps and sold to someone else. Different departments at the bank don't always talk to each other....
This is a very strange time right now, which offers opportunity but also some frustrations. Persistence will help.
The advantage to you right now is that you have already seen the house, evaluated its value, and can try to set up a contact with the departments in the bank. There's the loss mitigation department that normally handles it during the short sale. There's sometimes a loss prevention, or home retention department, and then there's the REO department. If you can get into the loop, sometimes (not always) you can get your offer known prior to them selecting an agent to list it. Once they take a home back, they could put it back on the market in a matter of weeks, or months. I haven't experienced a set period even with the same bank. If it goes back on the market as an REO, and listed by an agent, you can always resubmit your offer then. Put the home on your client portal and you'll know as any status changes on the house.
Hope this adds to it...Good luck!!!
Realtor, GRI, ABR, SRES
The Galster Group
I hope this helps. Good luck.
It could be quite a while before it goes back on the market otherwise. I do not know California rules.