Negotiating for a discount on the mortgage with a lender is called a shrot sale. The leander allows you to buy the property for less than the mortgage balance.

Of course, a home owner must be behind on their mortgage for the loan to qualify for a short sale.

You as the real estate investor identifies motivated sellers who qualify for a short sale and you negotiate with lenders.
Here are importand factors to consider before doing short sales.

1) Qualify your properties properly
All properties are not short sale candidates. Trying to negotiate for the wrong properties can be a big waste of time.

A mortgage must be at least two months behind to qualify for a short sale. The mortgage balance is an important factor to consider. A property with only one mortgage needs to be profitable if you get only 10-20% discount.

If there are two or more mortgages, then discounting all the mortgages can produce a lot of equity and profits. A second mortgage can be discounted by as much as 80% or more.

Properties with more than one mortgage are likely to be your best candidates for short sale.

Of course if repairs are needed, you must factor all the costs.

2) Short sales take time
A short sale can take 3-6 months, sometimes more. If you are new to real estate investing, you must consider this waiting period before adopting short sales.

You must have enough capital to take you through the long waiting periods.. Otherwise adopt short sales as a part-time model in your reale state investing business.

3) Be prepared for failure
A lender can reject your short sale application for a reason that does not make sense to you. They can reject it even when it looks good. Be prepared for rejection.

Having many short sales at once is therefore helpful. If you have selected your short sale candidates well, expect a 60-70% success rate.

4) Time is of the essence
You might not have enough time to stop foreclosure if a property is about to be foreclosed.. Select properties that allow you time to negotiate with a lender.

5) Have an acceptable exit strategy
A lender will not accept certain types of transactions for short sale deals. For instance, lenders will not accept wholesale dels with “and or assigns”.

You must close as soon as your short sale is approved. Most banks will give you about 30 days.

6) Be prepared for big pay days
Some deals will make you good money. As long as you can qualify them properly it can be a source of big profits for you.

Simon Macharia is a real estate investor in Dallas, Texas. He has done a lot of short sales among other transactions. His business is run and automated by real estate investor website from http://www.realestateinvestorswebsites.net