There are several different forms of how this could have transpired. One of the more common ones is a middle man. That is, there already may have been an accepted offer on the home by an investor. Say that offer is already done and accepted for 371k. Now another buyer comes along and he purchases the home for say 450k and he thinks he is buying it direct from the short sale lender. The escrows would close at the same time. If it is done properly, the investor ownership of the home could be shielded in say some company name. It is doubtful that was what happened here. As hard money lenders we ran into an investor who was going to use our hard money to do this. He was working with a listing agent who had the short sale listing. The listing agent also had a buyer so they had it set up well.

This is a good example of a pitfall of working with the listing agent directly.

The original poster may want to file a complaint with the dre or at least contact the broker.