In this case it seems the SELLERS (owner not the bank) has already accepted the offer, but it now needs to be approved by the bank for the short sale.
Many banks will NOT do a BPO on a house before there is a written contract so even if you know what the seller owes, it sometimes hard to figure out what sales price the bank will accept.
I have one listing like that now, despite my please to the contrary. It seems counterintuitive...do the BPO, let the "investors" determine what they will accept as an final payoff, and list the house as a pre-approved sale of "X " dollars, but that's typically not what happens.
I have had 4 short sales listings this year this year so far (not that you'd know it by my sleep deprived first post and I am still embarassed by that mis-information) and three have sold...
The owner of record (the seller) signed the contract, then it was presented to the bank for the short sale approval. Each time while waiting for the approval, the buyers did their home inspections and got their mortgage application going while waiting to hear from the bank.
The third one is scheduled to close on Monday. The buyers did their home inspection on May 18 and the bank only issued the short sale approval on June 2, giving us till July 2 to close the transaction.
Your statement that "Really, a home inspection BEFORE you make an offer? Is that how they're doing it in NJ? In Ohio, even in short sales, we'd never let our clients pay for a home inspection before an (sic) excepted offer. " is not totally wrong, but in some of these cases, it pays to do the inspection even before the approva. I have seen them done even before an offer is made. If the house is really, really bad, the buyer can walk away, and is only out a few hundred dollars for an inspection, rather than a few thousand for the mortgage application plus potential repair costs too.
With a condo, it may be less important to do the inspection right away since some of the repairs will most likely be covered by the HOA