Something similar happened to me; had an offer for 65K which was totally in line with sold comps on the same street but lender told me they needed 83K net. Result, they foreclosed.
Lenders are interested in the FINAL NET, not the selling price. That net gets influenced by factors we Realtors don't always know or are privy of knowing e.g. a portfolio insurance the investor purchased that this loan is part of. It may get triggered by foreclosure. That's a different insurance from the one a buyer purchases when the down payment is less than 20%.
The lender simply compares the FINAL NET for both, short sale vs foreclosure and goes with the highest net. What I object to is why am I not told at the beginning what kind of net the lender must have to accept a short sale. Not knowing that puts us in a volunteer category involuntarily!