That depends on the lender. I once choreographed a short sale for a property in good to excellent condition, the mortgage and taxes were faithfully current, and the homeowner was fully employed with no discernable hardship. I never thought the lender would agree to accept less than it was due. But it did, by about $25,000.
I worked hard to prepare for the appraiser, and provided every scrap of info I could about the neighborhood’s decline, average DOM, etc.
The seller was only too happy to sell, quickly, and pay income tax on the forgiven debt. The listing broker bought it and flipped it within a couple of weeks after the happy homeowners moved out (into another home sold to them by the same broker)
We have an investment prop. in Kansas City, MO. It was a rental. Since we moved from the area it has been broken into - furnace, water heater, bathtub, toilet, etc. was stolen. We no longer want the property and wish to get rid of it. We have advertised in the local paper - 60k (what we owe), but flexible terms. Only 3 responses and no deals. We are at the point of listing it with an agent, but we know we will take a loss on the sale. So, I was thinking - could this be a short sale opportunity? We aren’t behind in the payments, but the last appraisal we had (Summer,2005) came in around $50k and there is approx. $10k in repairs needed. So, we are looking at probably selling this for $30-$40k (as is, no repairs will be made) and having to come out of pocket to pay off the loan (which we really don’t have). With a short sale, we wouldn’t have to come out of pocket to close the deal although I know we will be taxed for the difference between what is owed and the short sale amount, but we can deal with that over the rest of the year.