I think down payment is extremely critical nowadays with the dreaded appraisal box "Declining Market" being checked throughout many areas of the greatest state of California. In our area of Sonoma County when the appraiser checks this box we loose 5% of the appraised price right off the top!! So your buyer has automatically put themselves in a position where they AND the property must qualify differently. a 10% down payment now is 5%!! So your 20% I'm sure is being looked at by the Loss Mitigation department with longing eyes. But that's not really the issue as they are so inundated and under siege they may not even get around to you!! Short-sales DO close but you need to be patient. If short-sales are dominating an area where you are looking I'd consider NOT buying in that area. I think we are just seeing the beginning steps of a long, ugly journey of to many homes being foreclosed upon. it is almost a societal norm to "walk" from your financial obligations. I would advise you to be extremely realistic about actually completing the "short-sale" escrow. As Julie answered below, you've got a 1 in 5 chance of doing a successful "short-sale" deal. Find an REO or better yet a very motivated HOME OWNER SELLER who has equity and needs to sell. Your Realtor/Licensee can search the MLS for these rarities! Good luck. Check out my "Short-Sale" web site. http://www.SonomaCountyShortSales.com
It give you great advice and pitfalls to avoid.