As the housing market continues to be unpredictable, although many experts do believe that it is finally stabilizing, the volume of short sales and would-be short sales continues to rise. In fact, short sales account for nearly a third of today's home sales, and far more than that in some markets. As a result of this, more and more sellers who believe that they will never make a profit on their homes thanks to their current underwater state are looking at short sales as a way out.

However, just because you want to do a short sale does not mean the bank wants to do one with you. For example, if you can make the payments on your mortgage and do not qualify or want an adjustment but rather just want out of the deal, then the bank may refuse to work with you. Instead, the lender will likely feel that since you can make the payments you should be making them. This leads to an extremely murky area that lenders, loan adjusters and the real estate investors who work with them and their would-be sellers must navigate very carefully. We have all heard the stories about mortgage brokers' representatives who told homeowners to stop paying their mortgages or loan modifiers who instructed applicants on the art of the strategic default. Many of these people have now lost their jobs or even been implicated in fraud.

As a short sale investor, you are doubly suspect at all times thanks to all the bad press that real estate investors and short sale investors have received simply for generating profits on their short sale deals. As a result, if you encounter a homeowner that can afford their mortgage payments and has elected not to pay, be very, very careful how you represent this situation to the lender and how you phrase any advice to these homeowners. You may even want to work with a real estate attorney to determine where your greatest areas of risk lie.

As federal programs dominate much of the short sale market, you will find that more and more of your potential clients are people who have unusual situations, such as having been denied access to HAFA and HAMP, rather than people who simply need out of their homes. You do not necessarily need to refuse to work with people in strategic default, but you do need to be very aware of exactly what the ramifications are for your real estate investing business and your professional reputation. Depending on how you handle the situation, they could be very good or problematic.

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