Short-Sale Negotiations

[Erik K.]

I have been working with a homeowner to avoid foreclosure.  I guess in this case he wouldn't be considered a seller.  A Notice of Default has been issued and the borrower is a few months behind in payments. He currently owes $140,000.

The ARV on the home is $80K and it needs $20K in repairs leaving me with a current value of $60K. The owner wants $10K to walk away so I am prepared to buy this property for $50K.

My question is what is the best way to negotiate a short-sale with the bank?  I've seen some posts that suggest you need to wait until the property is listed and then work with a realtor while others say it can be done without being listed and without  realtor.  

Any advice is greatly appreciated!