Buyers ask me this questions all the time? "Why is this short sale so high?"
If the short sale house only needs cosmetic work, then yes I absolutely agree that the bank can ask for mkt value & should not be in a rush to discount it. However, the houses I had in mind (sorry for not clarifying), were houses that needs a LOT of work or full renovation, but are priced similar to a regular sale house with minimal work. I see it very often.
My point is for us agents who do short sales, our volume of closings would significantly increase if the bank was a little bit more flexible, especially considering their volume load. More revenue for us, & at same time less headaches for them by decreasing their volume.
For my short sale deals, only a cash investor or a willing & visual buyer coming to the table with a 203k loan would be willing to take on some of these houses and close the deal. Even these buyers walk sometimes, bc their realistic offers were rejected & they simply have me find another deal.
Another issue I often come across is the bank sends out of town appraisors that have no idea about the area except what they see on their computer screens. Thus giving the banks an unrealistic mkt price.
It was reported that 2012 was the best year for ROI for real estate in six years. I believe 2013 will be just as great if not better, and short sales will be a big part of that, even with increasing prices.