Legal Question in Real Estate Law in California

If the bank does not think you are pulling a fast one, which they probably will as they assume you are wiping out your debt to them but then buying your house back at the sale price, you can do so. The bank does not want you to profit in any fashion from the short sale. If they express any about the buyer and your relationship, offer to include a clause in the sale that if you live in or buy the house back after the sale then the sale will be considered void and you will pay a damage amount of $X -- but they likely will not accept that.

If the bank does not think you are pulling a fast one, which they probably will as they assume you are wiping out your debt to them but then buying your house back at the sale price, you can do so. The bank does not want you to profit in any fashion from the short sale. If they express any about the buyer and your relationship, offer to include a clause in the sale that if you live in or buy the house back after the sale then the sale will be considered void and you will pay a damage amount of $X -- but they likely will not accept that.

The bank will need to approve all aspects of the deal -- not just the price. They'll want to know the identity of the buyer, whether the buyer has an agent, whether there are commissions to be paid, the history of the negotiations with the buyer, and who knows what else. If they are still happy with the deal after they ask all their questions, they'll go ahead with it. Ultimately they just want all the money they can get, without leaving anything on the table, and have only a limited interest in anything other than getting top dollar.