This is with an investor approach, mbut can be easily used by an agent wanting to help a client facing foreclosure 

A short sale is a win-win for everyone involved.

The key to taking advantage of this strategy is to understand the dos and don'ts of working with a bank's loss-mitigation department.

Making the Bank's Loss-Mitigation Department a Friend, Not a Foe As soon as your motivated seller is comfortable with you and your short-sale package, the time has come to work with the bank. So you make a call and ask for their loss-mitigation department. (In some banks, it will be called the work-out department, foreclosure department, short-sale department, loan-modification department, or reinstatement department.)

Once you have the bank's rep on the phone, get to work. This person will make or break your deal, so be very nice. Your initial conversation should go something like this: 

"Hi, my name is Sue and I am calling on behalf of Bob and Sally Smith [the distressed homeowners]. I have an 'authorization to release information' form I'd like to fax to you. What is your fax number? Great, I'll send it right over."

Stay on the phone while the rep retrieves the form from the fax machine. When he returns, continue the conversation. It should go something like this:

"As you know, Bob and Sally are in foreclosure. I recently met them and they seem like sweet folks. When I found out about Bob and Sally's dilemma, I said I'd try to help. They would like to sell their property and get on with their lives. I own several rentals in the area, and I am willing to purchase Bob and Sally's property. However, we have a big problem."

"I called a real estate agent friend of mine and asked her to run comps for me. Based on her comps and what I know about the area, Bob and Sally owe much more than their property is worth. As I said, I'm willing to help them out of foreclosure - and help you get a defaulted loan off your books - but I can't possibly pay the mortgage balance. Would you consider some sort of short payoff or something along those lines? Great! What do you need from me?"

By taking this approach, you will not come across as a professional investor out to make a killing on the bank's loss. Many investors choose to present themselves that way, but I think you will have much more success as a friend trying to help Bob and Sally. (I certainly have.)

Use either approach - whichever one makes you feel most comfortable. But never lie to get the deal. Given the above scenario, for example, it would have to be true that I did recently just meet Bob and Sally... that I do have rentals... that I do have a real estate agent friend... and that I am willing to purchase Bob and Sally's property.

In your conversations with the bank's loss-mitigation rep, be certain to refer to your distressed homeowners by name as often as possible. This makes them seem more real. (Keep in mind that you are trying to build rapport with the rep - trying to get him to make an emotional as well as a business decision.)

After you send your short-sale package to the rep, call him at least once a day to follow up. Always ask him how the day is going, how the weather is where he is, how the kids are, and so on. You want the rep to look forward to your calls, not dread them.

Find out who makes the actual decision, how long it typically takes, how long the rep can give you to close once your proposal is accepted, etc. If you maintain a helpful attitude, your loss-mitigation rep will push it through quickly.

When your short-sale proposal is accepted, get it in writing immediately. Find a buyer for the property or arrange financing, and get the deal closed. You don't want anything to happen between the bank's acceptance of the short sale and the closing.

Once the deal is closed, send the rep flowers or a gift basket and write a letter to his boss saying how much you appreciate the professional way you were treated. The rep will remember you - and the next time you call about a short sale, he will be more than willing to help you again.