Hello, Vicbabs. Great question! I've worked on many short sales in the last couple of years, and successfully closed the vast majority of them. I have never received a verbal approval of a short sale. TYPICALLY, here is what happens:
* Potential buyer makes a written offer, and submits to Owner / Seller.
* Owner / Seller accepts the offer, contingent upon lender approval, signs (ratifies) the offer and returns it to the Buyer. At this point, you have a contract, whose terms are contingent upon the lender's approval.
* The Seller (or his Agent) then submit the contract to the lender for review, negotiation, and approval / modification / rejection. The Seller will also have to submit a very comprehensive "short sale package" to the lender before they will consider the contract.
* The lender puts the contract in a queue, waiting to be assigned to a negotiator. This can take several weeks, or even months. My experience with Bank of America is that this will take at least two months.
* Once a negotiator is assigned, the negotiations begin. This can take a couple of weeks, even a month or two.
* When the lender and the Owner / Seller and Buyer reach agreement, then the lender will issue an "OK to close" letter which will contain the conditions that must be met to get lender approval, and satisfy the contingency on the contract.
* Then, closing can occur, anytime within the time limits specified in the "OK to close" letter.
Vicbabs - Short sales are not for the faint of heart, and Bank of America is notorious for being among the most difficult! I would urge you to work closely with an agent who has done SEVERAL short sale transactions! Ask them all these questions, and more! And no, if you don't know the answer, then there's no stupid question. And yes, typically, you only get the keys to the house after the closing.
Best of success to you in this venture!