Kinzie - great blog entry! I'm glad I stumbled across your post!  (Entry can be found here - http://activerain.com/blogsview/978465/Short-Sale-Discussion)

I am both a licensed Real Estate Agent, and an investor.  I've been working short sales with others who were the investor, as the LA, but only recently made the decision to get involved in the process as the investor -- i.e. helping the homeowner to avoid the foreclosure by making an offer to purchase the home, and by seeking a new buyer who will purchase the home long before the foreclosure takes place.

One of the common traits of a pre-foreclosure client is they will be in denial for a goodly portion of the time they are falling behind in payments.  Rather than taking charge and dealing with the problem head on, they just continue to deny that it's really happening, to them!  OMG!  There is a reason the house is going into foreclosure and they have to admit that they are a variable in the equation.

You quoted a statistic -- the 10% success rate -- which may or may not still be accurate, I don't know.  Here's another I've heard recently which is surprising --  50% of homeowners whose house goes to sheriff's sale, have NEVER contacted their lender directly during the entire process, not even once!   

Nor have they contacted a consumer credit counseling agency, or an attorney.  Many don't even contact their lawyer to "file a delay of sale" because of the hardship the foreclosure will cause them.  It's ludicrous, but those are the signs of a borrower in denial. 

Here's another.  When I present my paperwork I use in the process to the homeowner, which shows them clearly how the process is going to work, they often say, "I want to run this by my attorney".   I used to say, "no problem, that's fine".  In the future, I'm going to try to really ferret out what their issue is with the paperwork -- their "objection" to simply sitting down and reading the docs themselves --  because once they contact their attorney they discover the attorney is nearly as confused about the process as they are! 

The attorney I had on the phone yesterday didn't even know what a BPO is.  How are these "legal eagles" really supposed to help them when they often don't understand the basics? 

Here are a couple critical basics they often don't understand: 1) that you have to have an offer in hand before you can ever petition the lender to compromise the debt, 2) that one of the investors goals is to keep more liens off the house while the potential transaction moves forward, 3) and three, any investor who starts this process will definitely try to get a complete settlement of the debt, if at all possible, completely eliminating fears of any deficiency judgments.  How one structures a deal to prevent these things can be a little complicated, to both the homeowner and the attorney they respect, whom they insist needs to approve everything they do all of a sudden.

I'm going to start asking them, "Well, did you have your attorney present, or even ask them to review your mortgage, prior to your signing on the dotted line?".   Now that they are 3 months behind on payments, suddenly their attorney is called in to save them?     

Working short sales is not for whimps.  I've been beating that through my thick skull for nearly a year now, and thank God, I think some of that truth is finally starting to sink in.

That's why I believe 90-98% of Realtors should focus on finding the retail buyer and leave the SS negotiating up to an investor.  That's probably why your 10% figure is not that far off the mark; a lot of Realtors aren't really ready for the fight.  I'm ashamed to say, I used to be one of them!  

All my personal and business best to you.  Great post!