Banks choose a short sale because of the financial benefits. They can save 20-40% by executing a short sale rather than allowing the property to foreclose. With all of the fees and the lower sale price of a home in foreclosure, a short sale allows the bank to recoup more money. Also, remember that the banks are not in the business of owning property. They are in the business of lending money. Therefore, it is in best interest of the bank to do a short sale.