Short sales are often a moving target. How to proceed depends on the circumstances of each one when determining the likelihood of success with respect to negotiating short sales.
In terms of time and pitfalls, you should look at a variety of factors:
1. Who is the bank?
Is the lienholder or bank a local lender or is the bank a national entity? If local, the chances are much greater of getting a timely and/or positive answer. If the bank is a large, national lender, the more likely the response will be delayed (sometimes considerably). However, even if the bank is a large one, the listing agent may be able to tell you whether they have worked with the bank before, how often, and if so, they may tell you what their experience has been with the bank. An experienced listing agent may have quick access to a bank negotiator and can find out information faster than others.
2. Is the agent representing the seller experienced in handling short sales?
The seller, the listing agent and the bank all want the sale to be successful as well. A common theme from agents is to place all or most of the blame on the bank in terms of the lack of success with the short sale. From the banks' perspective, it is important to be aware of the other side of the coin. Banks often claim the listing agent and/or the seller determines the success or failure of the short sale. Failure to provide the bank with all of the necessary documentation, not providing accurate information, or not following all of the bank's requests are some examples that cause considerable delay and/or an unsuccessful outcome. If there is one thing a bank wants to avoid more than a short sale, it is a foreclosure. Short sales are much more inexpensive to a bank than taking a property back via foreclosure. Have your agent try to find out how many short sales the agent has handled. Any agent can look up an agent on the MLS and find out how many short sales an agent has closed on behalf of a seller.
3. How many liens are involved with the home and how much are the liens?
In general, the fewer the lienholders involved with the home, the easier the short sale. Likewise, the less owed by the seller, the better the chances for a postive outcome.
4. Is the short sale price approved?
The listing agent will usually state the price has been approved by the lender. Ask if there have been other offers and if so, was the offer price accepted or did the bank counter and what was the counter price. If the offer was accepted, ask what happened to make the buyer change his/her mind?
5. What is the reason for the seller needing to sell short?
There are certain criteria that a seller must meet in order for the seller's lender to approve the short sale. Essentially, there can be a lot of reasons, but the general rule of thumb is something must have happened or will happen in the near future, which will cause the seller's expenses to outweigh their income and cause mortgage payments to be missed. It is not a question of whether or not the seller "wants" to do a short sale because they are under water. The seller must "need" to do the short sale. It is critical to find out what the circumstances are as to why the seller is doing the short sale. If the reasons are not likely to be approved by the bank, you will be wasting your time.
6. Is the seller's agent cooperative. Communication between agents is critical, especially with a short sale.
There is little or no downside to asking questions of the sellers' agent, especially an experienced one. You may say "Why would my agent ask the seller's agent if the bank will reduce the price after my inspection?" Of course they won't say "yes", right? That may be right. However, in my experience, the answer has been "yes" more often than I thought it would have been. There is nothing wrong with asking the question. If I hadn't asked, the decision to make the request might not have been made. Asking questions can provide potentially great information. Whatever the answer is, take it as part of the information needed to make a more informed decision. Asking questions, even ones that appear unproductive, does not mean they will be unproductive, nor does it mean suspending good judgment regardless of whether you like or don't like the answer.