Here is how it may make a difference.
Some homeowners owe more on their homes than the home is worth, the definition of being underwater. The home is not going to sell for what it is worth, it will sell at or around market value. The bank generally understands that. The bank as representative for the investor on the loan wants to lose as little money as possible, but knows there is going to be some loss.
The banks have procedures in place to approve short sales. At Chase they have the number of people who have to approve a short sale broken down by the amount of loss, not by the value of the house.
So if the loss is $250,000 or less, only one lowest level of negotiator needs to approve. If the loss is $250,000 to $350,000 the offer goes to the 1st negotiator and then a negotiator one level up. At $350,000-$450,000 it goes to the first 2 plus one level up in management. And so forth.
So the greater the loss the more people have to approve before it even gets to the investor and/or mortgage insurance company. Each person who needs to approve can ask for more documentation or just ok the file. All of this takes time.
The bottom line, the bigger the loss, the more time you should expect for approval and the more doumentation you may need to provide.
So knowing that, don't try to keep up with the Joneses. Just because your best friend's short sale was approved in 3 weeks, and you are still waiting at 8 weeks, it does not mean you got the B team looking at your file. You just may have more managers that have to approve that are gumming up the process.
If you have any questions about short sales in San Mateo or Santa Clara County please feel free to contact me.