Great questions :o)
You, as the buyer, make an offer to the seller. The seller accepts, rejects, or counters the offer w/in 24 hours (that is what we ask for). Then, once the offer between you and the seller is executed (with a contingency of the lien holder accepting it), the seller then takes the offer to their lien holder. This is where the wait occurs.
The seller's representative (the listing agent or maybe an attorney) compiles a package of between 50 and 80 pages containing:
- the offer between buyer and seller w/short sale addendum
- buyer's prequalification letter
- arm's length transaction forms (sometimes) by buyer
- arm's length transaction forms (sometimes) by seller
- arm's length transaction forms (sometimes) by REALTORS
- a hardship letter from the seller
- a HUD-1 from the title company based on buyer's offer
- last 2 years tax returns from the seller
- last 2 months pay stubs from the seller
- last 2 months bank statements from the seller
- a financial statement from the seller
- the listing agreement between the seller and the real estate brokerage firm
- written authorizaton from seller to allow lien holder to talk with seller's representative (REALTOR or lawyer)
All of this is faxed to a number for the bank or uploaded into a database. Then, the seller's representative calls after 72 hours to see if it's been recieved. They call every 3-5 days for an update on the file. Sometimes the lien holder asks for additional information, clearer copies of documents, etc. Once they have verified all the documentation (which can take days, weeks, or sometimes month(s)) they send it to a negotiator. The negotiator then re-verifies all of the paperwork and opens lines of communication with the seller's representative.
The negotiator orders a BPO or an appraisal to be completed on the property. Generally takes 7-10 days. Based on the numbers from the BPO/appraisal, the negotiator tells the seller they are accepting, rejecting, or countering the seller's offer to the lien holder.
Sometimes they will accept the offer from the seller, but make the seller bring cash to closing (most seller's can't do this and have to say no), sign a promissory note for the difference owed (some seller's do not have the ability to make payments on a house they no longer own, so they again have to say no), execute a 1099 form to count the loss as income, or just say ok, you are relieved of the debt.
Or, the negotiator can counter the offer and do all the above. Or, they can reject the seller's offer to them and begin foreclosure proceedings.
All this sounds awful. It's really just a test of patience for the buyer. The person really affected by this is the seller. Their credit, their house, and their future income is impacted by the lien holder's, and ultimately their, decisions.
The way I write the offer, you, as the buyer, don't have inspections, appraisals, or anything else ordered for the house until the lien holder, in writing, accepts the offer from the seller. Then, the seller gives us, in writing, the acceptance and the ability to move forward. Finally, we get it closed as soon as possible to avoid foreclosure (which usually isn't an issue, but can be).
Hope this information is helpful :o). This is my experience in the Tallahassee Real Estate market. As always, "All information deemed reliable, but not guaranteed. Talk to an attorney or financial professional for specific questions regarding real estate. Blah, Blah, Blah :o)"