I am attempting to do a short sale on a property that has negative equity.The question is... should I negotiate with the lenders to get an idea of what, or if, they would short their position BEFORE I sign any agreement withe the current owners OR do I need to sign a P&S with the current owners and make it contingent on a successful short with the lender??

Otherwise, I hope some of the Chicago contingent steps up to help you out.

Also, put in a contingency: Subject to my funding partner's inspection.

Even then, $100 is not enough to deal with contingencies of any kind.

Here's a general formula that I've seen in several places that I intend to follow:Maximum Offer Price=(20% Profit)-(10% contingency)-Repair CostsExample: Repair Costs=5k...I would offer no more than 65k on a 100k fmv home

Construction Items required in a Preliminary Package1.Project description (which includes number of units, proposed pricing of units, total costs, per plan costs, profits, proposed equity and proposed loan amount, any subordinated debt)2.Project cash flow3.Location map4.Cost breakdown 5.Market study - if available (an internal or third party study)6.Sequence list (including lot number, plan number, base price, proposed premiums) 7.Biography or resume of key management8.Authorization/Release for Business and Principal9.Borrower’s Certificate of Past Credit Relationships (attached)10.Banking references and two sub-contractor or supplier references (attached)11.List of all current projects (location, price range, size range, sales rate, JV partner, lender) (attached)12.Financial Statements for borrowing entity and guarantor(s) (attached)a)Current financial statements, indicate book value or market value basisb)Statements must accurately report all assets and all liabilities (include contingencies)c)Statements must be signed and datedd)Signed tax returns for past two years (please include all K1’s)13.Financial Statement Certification (attached)14.Tax Return Certification (attached)15.

Then, if I decide to go with the property I could make an offer contingent on an inspection and financing, and my lender will probably require another appraisal by one of their guys so I would end up paying for two appraisals.

no good.i've never been involved in a lease option transaction, but i know this much:the transaction must be "recorded" - i guess that means at the county offices and/or definitely notarized.a deed is drawn up that states the sale of the property will take place on X and is contingent on blah blah blah [the buyer fulfilling the lease requirements].if they don't, they lose their consideration (money down).

The KEY here is to imagine every posible contingency and take that into consideration BEFORE you jump in.

Do NOT go into this or any other deal with a girlfriend, fiance or any other party that you're not married to WITHOUT A VERY DETAILED BUY/SELL AGREEMENT to cover EVERY contingency.