Short Sale the Only Option?

[Heath Ryans]

BP Community,

I'm a new investor, pushing hard for my first deal. I have been logging some serious driving for dollars time and i have a list of approx 43 properties that i have mailed to in the past month. Well i got my 3rd call back today and that's what this post is about. 

I got the call and drove out to see the house an hour later.  I talked to the guy and he said he was about to lose the home to foreclosure, which it has been in the process of for years. He had been in the hospital for months and just recently got to come home. He was needing a way out because he was about to sign the home over to the bank. He has no money. 

It is a 3 bed, 2.5 bath with an ARV of roughly 175k, however, he owes 138k on it. He wanted someone to take over payments plus some cash to move out on but the house needed alot of work. So i thought that a short sale would be the answer. I told him that would be the only way i could think of that he could get rid of the property without giving it back to the bank. I also told him that i was unfamiliar with the process but i would find out if it could help him. But then he hit me with "but does that benefit me?" and that caught me off guard. The way i understand it, a short sale would benefit him if he was preforeclosure or considering filing for bankruptcy BUT he is already in both. If the bank would accept a short sale, that halts the foreclosure but hes still in bankruptcy for other reasons. So by selling the property, it would only be a headache for him without any upside.

So here is my list of questions

1) was I correct in a short sale being the only answer?

2) how does a short sale even work? like what is the actual process when dealing with the homeowner

3) i thought of this on my way home, but would you offer to cut a small check on the side to the owner if you got the property below a certain amount so that they would have an incentive to even go this route?