As has been pointed out, there is only one legal issue, which is that the lenders are not required to accept less than what they are owed in a short sale. The lenders are in fact holding you hostage if they know you want the house because they are trying to squeeze as much cash out of the transaction as possible before they accept the rest of the loss. As a buyer, you have very little legal standing to complain since the alternative is to be willing to take the house subject to any lien that has not been paid off. That is not to say that logic does not support the argument that asking for 20% of the 2nd to be paid is a significant percentage or that the listing agent is or is not doing a good job. The other option you have is to see if no one else will buy the house, it goes to foreclosure, and you try to buy it at the auction or from the first lender after the second lender and HOA liens are scraped off by the foreclosure.
Disclaimer: This answer is provided for informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. I am licensed in Arizona and can only provide general comments on matters outside of Arizona law. Actual legal advice can only be provided after a direct consultation in which all of the relevant facts are considered before providing a response.
Only about 10% of short sales every actually make it to closing. Most of the time it has to do with a 2nd mortgage not playing ball or excessive fees from HOA's and property taxes that scuttle the deal. The bottom line, lenders don't have to accept short sales, doing so is entirely discretionary. You either pay what the lenders ask, or you don't get the home.
You are not asking a legal question. You are asking a real estate question regarding negotiation and nothing in your fact pattern raises any legal issues.
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