4plex essentially you are correct. Now a distressed seller may indeed complete the short sale package and send it in prior to an offer coming in. However it is my opinion that they never get looked at due to volume.
Here is an example… I have a current short sale… It is a home in Lakeside. My clients sent in a fully completed documentation package many months ago to the loan workout department in an effort to restructure the loan. The package (at least for this lender) was identical to the short sale package with regards to the sellers information. So the lender would not budge… Now that we have an offer the lender has acted but in a very slow and disinterested manner. I am still haggling with them just to see if they will “consider” the offer. Consider being taking it seriously, sending an appraiser out, and giving me half a clue as to what they will respond to.
So yes you are correct that the first offer trailblazes the effort. Hopefully I will find out what neighborhood the lender will consider though I doubt it will be where this home is priced. I believe the home is priced to low and it will go to trustee sale. I think this is the case for many many short sales listed out there. Why these lenders think they will fetch more at auction is beyond me.
Your observations are on the mark. Getting any feedback from lenders in this market is key and what you described above is the only way to do it.
