Last minute short sale, how did they pull it off??!

[Matt W.]

Some quick background: 

I contacted a man headed to foreclosure back in April 2020. It was a nice SFH, probably worth $300k. He met me and showed me the inside, nothing wrong with it. His wife passed away in the house so he had problems just being there, didn't want to bother listing it. We called the bank together and found out the total payoff with interest and fees was @$280K, so not enough meat on the bone for a good deal. I said sorry I can't help you, and we went our separate ways.

A month or so later, I see it scheduled for auction at the county courthouse for $282k, and again I think "Too expensive, but I'll keep an eye on it."  I think the owner ended up declaring bankruptcy around this time, because the auction listing was removed soon thereafter.  

So now it's May 2021, and I look up the house to see what ever happened to it. On the county register of deeds I see it sold two months ago for $189k?@?@!! What?? How??! Also it was spelled out that the seller walked away with $2500 after all fees. I do some digging and contact the owners of the LLC who purchased it. It's a husband and wife, while speaking with the wife I can hear the husband in the background shouting "Hang up the phone, don't tell him anything!!!" The lady was courteous but did not give me any info.

I just requested the public bankruptcy filing from the courts to see if I can get any more info.  Does anyone know how they pulled this off?  The bank took an almost $100k haircut on this deal!  My thinking is that the seller declared bankruptcy which bought him a few more years before the house was sold (although he didn't live there).  The bank thought it would be better to get some money now rather than delay for years. 

How did they investor buyers even propose and negotiate this deal to the bank?  I assume his bankruptcy attorney had something to do with it.   Thanks for any advice!