Seeking answers from RE agents and community on a short sale.

[Ron Gosling]

My wife and I have made a cash offer for a buy and hold short sale SFH property back in mid-January. The owners accepted the offer and the paperwork was forwarded to the lender for final approval. We expected a long wait but added a contingency that if the deal was not approved in 30 days, we would walk away. A few days after the offer was made, we had a Home Inspector and Pest Control specialist walk and review the property. Not much new in the findings we didn't expect except for visible termite activity (doesn't seem too big or uncontrollable) and water damage to a bedroom window frame and interior wall due to a poorly installed AC unit and subsequent rainwater entering the house at the installation site (also reasonable to repair and capital budgeted for the fix). Neither issue was on the owners disclosure.

Now for the questions: if the 30 days pass without lender approval and we cancel our offer, does the original listing become null and void?  Can the original offer be modified lower to compensate for the repair work?  Do the owners, listing agent and lender contract for a new listing? Finally, since a copy of the inspection report went to the listing agent, do the two aforementioned issues, especially the termites, need to be mentioned in the new Seller's Disclosure?  

We like the house and all the financials work out even with the repairs.  If the house goes back on market we would make another offer at a lesser amount even knowing that the lender will take their time making the final decision.

Your input, comments and answers are eagerly awaited for and thanks in advance.