I was thinking about this and couldnt figure out how it would benefit a mortgage company to do a shortsale instead of just letting it go to auction. Would it go for significantly less at an auction? Ive read that auctions are necessarly dirt cheap and there can be some decent competion that can drive up the prices.

one reason that i could see a mortgage company conducting a short sale instead of letting the foreclosure go to auction is that they wouldnt want the black mark of the foreclosure being on their records. Also having a home go to auction will increase the amount a red tape and delays for that mortgage company, so many time i could see them going for a short sale in that situation.

not all companies will accept short sales, sometimes they can see it as bad business to accept a short sale and will let the home fall into forclosure. I had a nice duplex that i had my eye on, but the bank wouldnt accept a short sale for soe reason and they let it go to auction. I think they might see it as setting bad examples, that they would accept less than they are owed by the borrower.