In a short sale situation, the property is put on the market at a price that is irrelevant because it does not matter what the seller accepts as they have no ability to accept an offer below their loan. The bank decides.
Here is an example. 100%Buyer pays $1M for house which drops to $900K. Buyer had 100% financing and now has been hit by a reset of his option arm and cant afford payments. 100%Buyer puts house on the market for $750K and you say WOOOOOHOOO!!! The market just dropped 25% from the peak! Someone walks in and says not only will I pay you $750K, I’ll outbid the other 3 offers you have and will pay you $800K! 100%Buyer says great and submits the offer to the lender. Lenders says Go pound sand loser! Lender forecloses on property and puts it on the market somewhere between $850K and $900K.
