Homeowners who find themselves in a bad financial situation are pretty much doomed to eventually have their home foreclosed, right?

Wrong.  The short sale process is a way to help those homeowners who, for any number of reasons, are unable to pay on their mortgage.  Perhaps the main breadwinner has walked out, or maybe there's been a debilitating accident that has left the homeowner unable to make their monthly mortgage payment.  Whatever the reason, short sales are a great way to get those homeowners out from underneath their mortgage without doing too much damage to their credit rating.  In a nutshell, here is how I handle the short sale process:

After checking various foreclosure lists to see which homes might be candidates for a short sale, the first thing I do is find out who the attorney is; it helps if I already have a relationship with them.  Then, I run a Comparable Marketing Analysis; this entails finding out what comparable homes in the area have sold for and how long they were on the market before they sold.  This helps me see what the home is actually worth in comparison to what the foreclosure amount is.  It also helps to know various neighborhood statistics, including the crime rate, the number of vacant homes in the neighborhood, and the number of/proximity to sex offenders.

Then, I contact the homeowner to find out if they are willing to talk with me – first, with a letter, then with a phone call if their phone number is available.  If I am able to get my foot in the door with them, I will make a presentation to them and provide them information on how I can help them get out from under their debt without hurting their credit rating.  Usually, the options by this point are a short sale or a foreclosure; the latter is very damaging to a person's credit, so I try to make the homeowner see that a short sale would be the best option.  If I am successful, the homeowner will sign an authorization for me to speak with their lender and the attorney to find out more information about the foreclosure, including the balance of the principal, how far behind they are with their payments, appraisal amounts, etc.

At this point, I will also do an impromptu, unofficial inspection of the home, including taking pictures and making note of anything that is defective or broken, or if mold is present, for instance.

After discussions with the lender and the attorney, I'll make an offer on the property and take the homeowner a sales and purchase agreement.  This agreement will include multiple contingencies written into it.  If the homeowner agrees to the process, I have them start getting paperwork together; there is a very long list of things that have to be turned in when I start the negotiation process with the lender and the attorney.

Then, the negotiation process begins, and I try to work out an equitable solution that is satisfactory to all parties involved:  this usually means getting the property off the lender's books, and getting the homeowner out from under a mortgage that they simply can't pay.