Possibly a red flag.
Questions your Realtor may want to ask the Seller's Realtor:
Who is the "servicer" for the first mortgage? Who is the actual investor that owns the 1st mortgage?
If Fannie Mae, then this should have already been approved at least once at this point.
Is there a 2nd mortgage? Who is the servicer and who is the investor that actually owns the 2nd?
Is the property occupied by the owner? Is there a tenant living there? Even if the property was vacant, you should go back to inspect to see if a tenant is now living there with destructive pets and if any mold has accumulated or vandalism. You may want to cancel if the property is no longer a "bargain" due to the condition.
If the property is jointly owned, are both spouses cooperating and sending in their bank statements, paystubs every 3 months?
Is the first or second lender requiring the seller to agree to repay all or part of the loss? Is a promissory note required to be signed by the Seller?
If in an HOA or Condo assn is the property now in foreclosure proceedings or is the owner current on the HOA/Condo fees? An HOA or Condo can actually foreclose and take ownership and then rent it out. The first mortgage sticks to the property but it can throw a monkey wrench into the short sale.
The bottom line is until/if you get an approval letter in your hands at a price you are willing to pay, you MUST continue to SHOP for a home. Most short sale contracts allow you to cancel up to 7 days AFTER you receive your approval letter in your hands so you probably can cancel (even if you have to wait a month). For this reason, it's crucial not to deposit a large escrow check upfront on a short sale. I have heard of situations where an unethical (former Realtor) owner refused to release a buyer's escrow deposit unless he was given $500 when the buyer was well within his rights to cancel.
Good luck and remember, keep looking because this may not ever close and right now we are experiencing price increases so you may miss out on these bargains and end up paying 20% more because of the current investor demand on properties in Florida.
All the best,