"Short sales" provide a shortcut for homeowners who need to unload property - and the mortgage debt that accompanies it - in order to prevent a foreclosure. One of the principle motivations for doing so, since a quick sale will usually fetch a lower price, is to avoid lingering credit history problems. By sidestepping a severe blow to one's credit, the financial future is easier to manage and problems do not get as magnified as they are with a foreclosure plus wrecked credit.

Short sales basically allow a homeowner to sell their home while it is in the foreclosure process in order to pay off the outstanding mortgage balance. In exchange for the proceeds from the sale, the lender often agrees to waive or forgive the remaining dollar amount of the obligation. For example, if a homeowner owes $300,000 to the lender and "short sells" for $275,000 after closing costs, the lender forgives the $25,000 difference.

Why all of this matters to foreclosure investors is simple. When a homeowner is selling under pressure - and the mortgage company may be willing to take less than what is actually owed on the property - the opportunity often arises for a buyer to get a great house at a bargain basement "fire sale" price.

In order to ensure success and profitability from short sales, it helps to follow a few basic guidelines. Here are four quick tips that may make the difference between a near miss and a wildly profitable transaction.

#1 Act Fast but Exercise Patience

The window of opportunity for a short sale is - pun intended - short. Have all your ducks (and documents) in a row and be ready and willing to act, otherwise you could miss the boat or be beaten to the punch by another buyer.

By the same token, however, impatience when dealing with a distressed or suspiciously wary homeowner or a slow-moving mortgage company bureaucracy can also sink the deal. Starting off on the wrong foot with the right person can be enough to ruin the best potential investment of your foreclosure career.

#2 What You Do Not Know Can Hurt

Even if the physical structure looks solid and sound - which you should not assume without the help of a qualified inspector - there may be financial skeletons lurking the closets. Many homeowners owe taxes or have liens on their homes, and if you take possession of the house you may also wind up owning a portfolio full of debt. Look before you leap so you buy equity, not problems.

#3 A Penny Spent May Be a Dollar Saved

Pros like home inspectors, appraisers, real estate attorneys, and contractors can be your best allies when it comes to buying short sales. When you're pressed for time and may have few chances to examine and evaluate the property and the terms of the sale, it pays to hire the best team you can afford and take their advice.

#4 Stick to Your Guns

Dealing with a homeowner who has an emotional attachment to a home heading toward foreclosure can be tricky, and it helps to be determined. If you don't succeed at first, don't give up. When dealing mortgage lenders it also helps to negotiate with persistence and stand firm. They aren't in the business of giving away free money, and getting a sweet deal may require tenacity and toughness.

Essentially, the investor gets the best of both worlds if the short sale goes well. They get a super-motivated seller teamed up with a highly motivated and resourcefully creative lender. For many professional foreclosure investors, the short sale is as close to perfection as it comes - and finding a good short sale property situation is like finding a valuable diamond in the rough.

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