Here's a tip for those of you doing short sales or thinking about it. I've been doing them for over a year now and they do require a lot of work. 

Before you spend a ton of time marketing and showing a short sale you need to find out how much the bank will sell for. So how do you do this?

The only way to know how much a bank will sell a property for is to get the first offer to them,  If the offer is too low, they will let you know.  They will tell you that they won't sell for less than X dollars.

If X dollars happens to be way over market value, then you know you're wasting your time with this particular sale and you can stop trying to make it work.  It won't.  The first offer is crucial.

OK, so I still haven't provided a way around this.  Here's what you do.  Build your investor contacts.  Get out there and find some serious investors who are willing to make offers on deals.  And what investor is not looking for a deal?

If you have an investor who is willing to buy a property at, say, 60 cents on the dollar and he is willing to back that up, then his can be the first offer you present.  In the best case scenario the bank will accept the offer and you can put the deal in escrow and get it closed.  In the worst case scenario the bank says NO but they tell you how much they are willing to accept.  Bingo!  Now you can advertise the listing as an approved short sale and it will be that much easier to get the next offer in since everyone knows that the bank has approved the price.

Doing this can save you a lot of time and frustration.  For whatever reason, I was not able to get an investor offer on a short sale I have listed right now.  But I did my market analysis and priced it right there where I felt it should be.  At true market value.  It's a lovely unit, almost new and we got a good offer on it at 95% of asking price. LP was $170K, offer came in at $160K

The package was prepared and submitted for approval.  The bank came back and said they would not accept less than $255,000 (original sales price was in the 300's).  Six weeks had passed since the submission of the package so I pulled the new numbers for the building.  Lo and behold, no new sales but there were 2 new REO listings of the same unit at $140K and $150K.  I sent all this data to the bank and tried to reason with them.  They did not budge.  $255K was their # and they were not changing it.  Now tell me, if you were a buyer and you had 3 identical units to choose from, 1 at $140K, 1 at $150K and my short sale at $255K, which one would you buy?  Precisely.

The bank didn't care.  Had I been able to get my investor's offer in I would have already known that there was no way to negotiate this particular deal.  It was like beating a dead horse.  I would have stopped my efforts right then and there.  Instead, I wasted valuable time just to find out that this particular bank was inflexible and their numbers were not reasonable. 

So get out there and start looking for investors if you don't have enough in your database.  You help them.  They help you.  It's a win-win for all.