I agree with all the comments below. But there are additional things to consider in either a foreclosure, deed in lieu of foreclosure, or a short sale. It is a complicated subject and difficult to answer in a Q & A format. Contact me directly, or attend my free information class on August 21 at 12 p.m. in my office.
A short sale avoids the maintenance cost and the legal proceedings are minimal. The bank still has to pay closing costs out of proceeds of the sale and it must still sell around market value, but it is more likely to be sold near market when the property is occupied by someone and it shows well. A vacant foreclosure property with missing appliances and damage just won't do as well, and the selling price will be disproportionately lower than just the cost of the missing/damaged stuff.
So, the legal proceedings may cost them a few thousand and the maintenance (paying a property manager to look after the property) may run into the thousands plus the loss due to unoccupied, distressed look.
The other costs are similar for each scenario.
If the house is worth $150k, regardless of how much is owed before foreclosure or after, the bank needs to use that figure to decide which way to go. If the mortgage loan balance is well below that, then foreclosure is likely. If the mortgage loan balance is above that, then short sale looks better. It's not really a function of the listing price or the loan balance alone as to which way a bank will go. But the foreclosure typically costs them several thousand more than a short sale.
If the market value is $150, it is unlikely that the bank will take less than $140, but we have seen them do exactly that. Every bank has its policies, and part of that is bird-in-hand thinking. They might take a $130k 'bird' over the notion that sometime down the road they might be able to sell it for $150k.
If the bank loses less by letting the home foreclose than what they can get in a short sale, they will let it foreclose and vice versa.
There is no set amount. It depends on what the home is worth vs. what is owed, etc.
You'd need to contact one of us with more specific information so we could get you the exact answer. Good luck to you.
Short sales can vary as to how much a bank loses vs. a foreclosure. The bank will seek to minimize its' losses in either situation and will try and work a short sale before foreclosure to save lawyer and court costs. I can discuss this with you at length over a cup of coffee or on a phone call. Please call my office to arrange or discuss further.