Help needed on potential short sale

[Arth Patel]

Hello,

I am looking at putting an offer for a short sale property and have some questions. It is an older property that was appraised for 117k a couple of months ago. The current owner owes about 114k on it, and the lender has stated that they will accept a "highest and best" offer.

I went to see the property and it is an older single family house that seems to be rehabbed few years ago. It does not seem to need any major repairs, but I am concerned about finding something afterwards.

My question is, when exactly in the process should I do an inspection? Before placing an offer? Or should I place an offer with a contingency of an inspection? I've heard that usually the lender does not like to see any contingency on the offer for best chance of acceptance. Also, I realize that a professional inspection can cost a few hundred dollars. Is there a way to do this so that there is a low chance of losing this inspection money IF I end up backing out on the deal? Or is this just considered a cost of doing business?

Thank you all for your inputs, and I look forwards to your inputs.