I currently have two buyers awaiting news on accepted short sale offers. One was accepted at the very end of January; the other the third week in March. Unfortunately, in both deals, second mortgages were involved--a situation that makes completing a short sale much more difficult.
To illustrate, in the first instance, the holder of the first mortgage was being bought out by another bank just about the time our offer was made. This accounts, in part, for the extraordinarily lengthy amount of time this "deal" has taken. The bank buying bank transaction has been finalized, and things seem to be moving, though with my buyers very interested in taking advantage of the federal tax credit that expires 1 December, they're getting more than a little antsy. Entirely understandable. We've even gone looking specifically for foreclosure/REO properties because we know those deals typically take less time. But, with the number of homes on the market having dropped by about 80% in the last year, and with the vast majority of those being short sales, there really aren't that many foreclosures on the market. When the moratorium on foreclosures expired a few weeks back, everyone thought there was about to be a glut of new properties on the market. But after only four days, the banking community instituted a new moratorium! Why not?! They're getting multiple offers on every new foreclosure listing.
Since you are in Corona, and to illustrate my point about inventories, I will add here that there were 315 active listings in Corona at the end of June. That compares with 1,418 in June 2008. There were 1,635 in April 2008 and, if memory serves, a little over 2,000 in October 2007. The decline has been steady, every single month since then. But even these numbers are not telling the whole story. That is because, the typical (but mistaken, IMHO) practice by too many listing agents is to continue to show a short sale property as "Active" even when the sellers have accepted an offer that has been sent to the bank. The agents believe they need to continue to accumulate offers in case the accepted offer is rejected., But as has been pointed out elsewhere on this board, the fact that the bank comes back with a "number" doesn't mean that the original buyers can't counter it. Therefore, it seems to me that the most equitable thing to do is put a property in "Back-up Offer" status. That way, the number of actual "Active" listings would drop even more precipitously and the banks would, perhaps, be encouraged to throw a few more of their REO properties onto the market.
The second potential deal is still alive, though it's on life support. The 2nd mortgage holder refused to take what the first was willing to give, and the deal seemed absolutely dead--but, it may have been just "mostly dead" (Billy Crystal, The Princess Bride!!). A couple of things happened. In this case, the holder of the 2nd mortgage was bought out. The new owners made it known that they would be wiling to take only five percent of the proceeds whereas their predecessor had insisted on ten percent. The sellers' agent, realizing that values had continued to decline a little, proposed an overall drop in price (~7%) but calling for my buyers to put in some extra money specifically designated for the 2nd mortgage holder. She and I will also throw in a piece of our commissions to bring the 2nd mortgage holder up to its requisite five percent of proceeds. Now, the 2nd mortgage holder is on board, but we're still awaiting word from the 1st. But, meanwhile, even though my buyer is putting in some extra money, he's still paying less for the house than originally.
Meanwhile, as to your last point regarding price, the two "deals" described above have taken so long that the first one has already had to have a second Broker's Price Opinion (BPO) done. It came in nearly $13,000 below the original/accepted offer. As to the second one, if the bank is even semi-interested in the revised offer, it will almost certainly order a new BPO to verify value. So, since a short sale is hardly ever (I hesitate to say never, though it may in fact be the case.) an expeditiously done process, you could easily be looking at a situation where, given that you "offered well over the asking price", it may be that if the bank drags its feet, a second BPO (or, if it gets that far, your lenders' appraisal) will not come up to your offer price and you'll have to either come in with more cash or risk the deal by insisting the bank take the BPO price. Those wouldn't be the only possible outcomes, but I think you get the idea.
To substantiate the above paragraph, Trendgraphix info shows that the average sales price of Corona properties in June was $306K, down from $311. But the average list prices were nearly $100K higher than sales prices. The listing price on your deal could have been intentionally set low so as to attract multiple offers.