Understanding a lender's logic on short sales
I need to understand how a mortgage lender thinks re: short sales when they've been paid a mortgage for 8 years.
Situation: Nice 3/2, 1,350 sq. ft. SFR in good location (great neighborhood, near schools, desirable part of town) purchased in Sept. 2006 for $202,000 ($199,186 mortgage). Since I purchased my current home during the exact same month (Sept. '06) and in the same part of town, I know mortgage rates here were around 5.25%. The home in question has been on the market for over a year, and still sits vacant, with 5' high weeds growing in the yard. The lender has approved a short sale...
Plugging in the numbers, we can easily see that the owner paid around $80k in interest over the 8 years he occupied the property, and the balance of the mortgage around the time he stopped paying (late 2014) was likely around $172,000.
The home is currently listed for sale at $175,000 -- not exactly a short sale, but close to my estimate of a $172k balance. 3 comparable homes within 0.4 mi. radius have sold within the past 6 months, averaging $181,300.
The property would make a great rental unit, renting for $1200 to $1250/month. It needs some work - likely $15-20k in rehab.
Questions: 1. What's it going to take (offer) to get the lender to unload this property? -- a cash offer? & at what price?? 2. Would a POF letter from a hard $ lender be sufficient (or appropriate) to accompany an offer, or will I need a check for the full amount of the offer?
Thanks!