The big question is 'where do I start?' when it comes to finding a deal on a short sale home.
I will skip over the steps of determining where you want to live, how much you can afford or finance, and what type or size of a home you want. Those are subjects in and of themselves that apply to any time you are buying a home.
The FIRST thing you need to do when looking for a deal on a short sale is find a GREAT real estate agent or broker! Nothing will kill your ability to get a deal on a home as fast as an agent that doesn't know how to work with and negotiate against a lender. Short sales are convoluted processes and you absolutely need a guide to even get one done, let alone get it at a bargain price.
Next you need to target homes that are not massively overpriced. Even if a home is a short sale, if the borrower truly maxed out the value on it at the peak of the market, it will be hard to get the bank to take an at or below market offer. Banks are for the most part out of touch with reality and are only willing to take certain losses on a short sale, even if it means eventually foreclosing on a home, and then selling it for less than the short sale amount. No that doesn't make sense to me either, but banks are like that.
Determine what a reasonable offer is and how much below that you can hit the bank. Again, if your agent knows their stuff, they will be able to guide you on where they think the bank will stop squealing and give in to your price. Come in far too low and the bank won't even talk to you. It is a fine line that you will need help walking.
If you did a good job at picking your real estate agent/broker, they should already know how to justify your offer to the bank.. When you submit your offer, you and your agent will nit-pick everything about the home and what needs to be done to it. Often times, these homes are in need of clean up and repair. After all, the owners couldn't afford to pay the mortgage let alone paint the place (and why would they?) Document and take photos of anything that might be considered a defect. Use this as leverage as to why the bank doesn't want this house and should sell it to you.
Lastly, be prepared to negotiate and to walk away if necessary. Banks, as I said, are irrational. It may come down to them not budging over a few thousand dollars. If you need to, walk away from the deal and find another.
Have more questions on short sales? Want to know more on how to find a deal on a short sale home, or need a referral to an agent experienced in short sale properties?