Try to figure out what motivates them; long term tenants are worth their weight in gold.Is the seller offering financing?  

And you admit you should have no problem renting the place again.The only loss is the "pain" of showing it and vetting new tenants. 

Even more so considering that there is real risk in that holding period, real skill needed to manage it and real risk that it goes up, real loss of any appreciation beyond the RTO price as well as still being able to lose if you bought in an already appreciated market that could fall which is the reason RTO is becoming more populor (higher price to LTV in many markets). 

Sometimes scary events like a job loss become opportunities when we look back on them.  

Because if it were passive, I was wondering if I could use our carryover passive activity loss from our real estate rentals (we do active participation but cannot use the PAL against regular income due to income limit). 

Many private lenders, who make loan decisions weighted more on the equity in the property, will be less concerned about those expenses.

(The bank is not going to just sell it at a loss to the first person who talked to the seller - they want it exposed to the market to get maximum value out of the sale).That being said, both of the above options are a real pain to deal with, and the odds are extremely long that the bank will sell to you at a significant discount.Here in Florida (even after #2 is complete), the short sale addendum to our contract allows the bank up to 90 days to review an offer.So, what typically happens is:1.

I focus on 1 thing, and that one thing always seems to be the easiest scorekeeping goals- money or weight loss.Enjoying LIFE should BE the GOAL!

Investors often show losses on paper, while actually making money through cash flow.

"Washington Mutual could face $26 billion in losses, with $21 billion from mortgages, a report from Lehman Brothers said on Monday.