The lender calculates a few things : 1) was there PMI on the loan that will be short. If so, their loss is not as bad. 2) They also get paid to short sell rather than foreclose - sometmes. If so, their loss is not as bad. 3) If the value of the house has dropped enough, the shortsale may be preferrable to a foreclosure. 4) the condition of the house. 5) Who occupies the house - borrower? tenant? vacant? and 6) the strength of the buyer. Short sales are not fast, are complex, and it is best to use an experienced professional.
And....just like there are ways to make a home 'more desirable' when setting up for a short sale, there are ways to make a home look 'less desirable' (mostly in pictures and description to the lender) that would make a lender more 'flexible' in the negotiations.
It is best to find and use a professional here, because some of this is borderline unethical, and you really want to make a win-win for all, without putting anyone (or the transaction) in jeopardy.
The answer to your question is, Yes. The mortgage company has provided approval to the owner of the home to sell the home, as a short sale and they know that they may not recoup the actual amount due on the mortgage and they also understand that buyer's may come in at a price lower than what they are requesting.
Your best bet on any home is to know what other properties have sold in the area within the past 6 months. You will also need to know what type of major work needs to be done on the home before you make an offer. The banks have already done their homework and they know what the comparables are in the area, but you, as a buyer have the right to put in an offer for what you feel is true market value.
Also, make sure that you have a mortgage pre-approval in hand, before proceeding with any of these foreclosed or short sale properties.
If you need further assistance, please feel free to contact me at 781-974-9189.
All the best to you!
Cawley Realty Group
399 Washington Street
Braintree, MA 02184