Reach out to a local RE agent who specialize in short sale and foreclosure (out of curiosity - would I really need her if listing agent is there for the property and/or would I be compensating my agent for the commission or she will be sharing commission with listing agent ?).

They are taking a risk and deserve to be well compensated.

He'd like to purchase it as a rental, and my compensation will depend on how far under 55k I can convince the seller to go.This is my first negotiation, and I sense she's motivated.

I was able to increase my rents enough to compensate for snafu's.

@Minka Sha I think you should follow @Elizabeth Colegrove with her advice about tightening the offer by offering lower cash but compensating them with the high likelihood of closing. 

I would be compensated by the 25% referral fee off of the Realtor's 3%.

Pay a commission or compensation to any licensee affiliated with the broker for performing services under this act; 2. with the written agreement of the seller, landlord, buyer or tenant share a commission with another broker who acted as a transaction broker, a subagent or an agent of the other party; and 3. pay a referral fee to a person who is licensed as a broker under the real estate brokers' and salespersons' license act or under the law of another jurisdiction, provided that written disclosure is made to the client of any financial interest that the broker has in the brokerage firm receiving the referral fee.

Now, I was at a credit union with a loan officer (with someone else) and that guy didn't even know what compensating factors were or how to figure debt to income!

@Gerry RaeThere is a thread herehttp://www.biggerpockets.com/forums/93/topics/1847...Arizona RegsDisclosures in a Transaction:In accordance with the Commissioner’s Rule, R4-28-1101 (B), a licensee participating in a real estate transaction must disclose in writing any information the licensee possesses that materially or adversely affects the consideration to be paid by any party to the transaction, including:Any information that the seller or lessor is or may be unable to perform.Any information that the buyer or lessee is or may be unable to perform.Any material defect existing in the property being transferred.The existence of a lien or encumbrance on the property being transferred.In accordance with the Commissioner’s Rule, R4-28-1101 (E), a licensee shall not act directly or indirectly in a transaction without informing the other parties in the transaction, in writing and before the parties enter any binding agreement, of a present or prospective interest or conflict in the transaction, including that the:Licensee has a license and is acting as a principal.Buyer or Seller is a member of the licensee’s immediate family.Buyer or Seller is the licensee’s employing broker, or owns or is employed by the licensee’s employing broker.Licensee or a member of the licensee’s immediate family has a financial interest in the transaction other than the licensee’s receipt of compensation for the real estate services.In accordance with the Commissioner’s Rule, R4-28-1101 (F), a licensee shall not accept compensation from or represent more than one party to a transaction without the prior written consent of all parties.NOTE: The above listed disclosure issues reflect only those requirements in the Commissioner’s Rules.

He wants to compensate me, but neither of us really have a gauge on what is fair in this situation.