Because of current economic conditions in the housing market there is a great deal of investor interest in the technique of purchasing investment property with Short Sales. So--what is a Short Sale? A Real Estate Short Sale happens when a seller's bank allows a property to be sold for, and accepts a payment of, less than the amount owed to that bank.

A rough example would be if a home owner currently owed $170,000.00 on a mortgage and the bank holding that mortgage agreed to allow the home owner to sell the home and payoff that mortgage for $150,000.00.

An overview of a short sale technique might work like this… You the investor would start by doing a marketing campaign or sign up for program to find prospects. Having found a few names you would contact the prospects and get one of them to agree to proceed with the short sale. When you have reached an agreement with that prospect, ask for a copy of their last bank communication to verify that what they have told you is accurate.

Before going any further you must search the public records in order to uncover any additional liens that may exist. This is important so that you can decide weather to stop the process or try to work with these creditors to get the liens removed. If you choose to continue, have the seller contact their bank or mortgage companies' short sale department and ask for a third party contact authorization and a Short Sell forms package.

After the bank's short sale kit arrives--have the seller fill out all the forms and paper work and return it to the bank. They should also give you the third party authorization information. Now you should contact the bank using third party authorization and talk with the person assigned to the case.

The bank should give you instructions for submitting your offer. When you submit your offer be sure to reserve the right to do a full inspection of the property should your offer be accepted. When the bank replies to your offer you should be prepared and negotiate if necessary. If your offer is approved you will need to monitor and promote the project periodically.

If that sounds like a lot of work to you-you understand the program! But there a few advantages to the short sale technique. They include:

" Instant equity " Lots of prospects " It's so complicated and time consuming that only a few competitors persevere " It is a good fit for systemized process " The seller could avoid foreclosure " There is a lot written on subject

There are also some disadvantages and some of those are:

" You will be dealing mostly with unmotivated and unhappy sellers " You will also have to deal with banks " The seller may owe taxes on the unpaid balance " This technique take longer than many other ways of finding deals " Seller may still owe the bank the difference " You cannot pay the seller any money if you want to stay out of jail " There may be other liens on the property

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