Our first offer was submitted to Wells Fargo, within 1 week we heard back from the bank that they received it, I got a contact number and transaction number and they extended the forclosure date two months.
We had to sign an affadavit that is was an "arms length" transaction, certifying the buyer was not a family member, friend or that they would sell or rent the house back to you, so the parent option is out.
The buyer withdrew from the first offer and now we have received our second offer. From my understanding most banks will extend the foreclosure date three times and try to make a short sale work. Although it takes some time and you have to have a very patient buyer, your credit will be saved and the bank prefers that you stay in the house.
After a short sale is complete in most cases the credit report is marked paid in full and you can have good credit and maybe even buy a house as soon as 12 months of no late mortgage payments. A foreclosure on your credit report will hurt you for 3-7 years.
I have found that Bank laws trump state laws, so whatever your state law is concerning loan and sale behavior the banks totally ignore it.
Stay in your house, hire a Realtor to list it (if you get no's find the short sale expert) and then get the necessary paperwork in for a short sale. I had to fax 67 pages of documentation, the Realtor will do it and the bank will pay the commission and maybe repairs if needed for financing.
Minor correction. You are LISTING the house below the payoff amount. The bank will be doing the 'pricing' of the house. Your listing price has NO legal standing for the price of the house UNLESS it is high enough to pay off the balance OR the seller has agreed to make up the short. Otherwise, it is just a marketing tool used to get offers to send to the bank.