Why do banks allow short sales?
Following are a few of the reasons that banks might allow a short sale:
(1) Typically, the bank can net more money in a short sale versus a foreclosure.
(2) Liability by having to "hold" the property after foreclosure.
(3) The bank would be responsible for taxes and insurance on the property if they foreclosed on the property.
(4) The bank may have to make repairs to the property in order to sell it if they foreclosed on it.