[Note: To follow is an excerpt of an interview with Dwan Bent-Twyford, author of "Short-Sale Pre-Foreclosure Investing." To listen to the show archive or download an MP3, go to www.IncomePropertyInvestmentTalk.com/121708.]

Mosca: In your book "Short-Sale Pre-Foreclosure Investing," you list your mission statement as, "to teach others how to successfully buy and sell property and increase their quality of life. The seeds you sow today will be the harvest you reap tomorrow." Could it be said anymore succinctly?

Bent-Twyford: I like that mission statement. I've had it for many, many years and I still feel the same way. I just spend so much time trying to help people have a better quality of life. When you read business magazines like Forbes and they always talk about how everyone accumulated new wealth, the number one way is always through real estate and that's a great thing. Even in a market like this, when people think things are so bad in the market is so horrible and the sky is falling and property values are dropping, that's good news for real estate investors and people who have a real estate license. Adapt to the market changes. For example, we always wholesale properties, meaning we get them under contract and flip them to somebody else. Because the market is down, equity is down, people owe what their houses are worth, we've had to adjust what we do to be able to still make money and be on top during this market.

Mosca: How have you adjusted?

Bent-Twyford: A really important need in the market now is learning how to do short sales, or negotiating with the bank to take less than what's owed against the property. There are millions and millions of foreclosures or people behind on payments and the number is growing and growing every day. Most of those houses don't have equity because people took out creative loans, interest only loans, borrowed 100 percent of their money and then when their payments reset and the markets dropped everyone lost the equity in their property.

By doing short sales, we are able to build the equity in and are wholesaling as much as we ever did and we always have. The only real difference for us is that we are wholesaling mostly to landlords now instead of rehabbers. Rehabbers sell to retail buyers and retail buyers are having a hard time getting credit and landlords are buying up as much as they can because they're getting the house for 50 percent of the value. The most important thing is the price. The price dictates everything. You can take the worst house in the world, sitting right smack in the middle of a railroad track and in the worst the neighborhood and it will still sell if it's priced right.

Mosca: In your book you encourage readers to "help homeowners in distress and get a deal for yourself." Can you talk a little bit more about how you can make yourself a little money but also help people out at the same time?

Bent-Twyford: The thing about short sales that is so great is that when we are able to negotiate with the bank to accept the short sale, the homeowners don't lose their house at the foreclosure sale. It helps the homeowner because they do not end up with a foreclosure on their credit report. We are able to buy the house for 50 percent of the value and give the homeowners some money to move and get a fresh start. For example, I get a $200,000 house for $100,000, I can turn around and sell it to a landlord for maybe $140,000. I've made 40,000 bucks which is a great deal for me, the homeowner did not get a foreclosure on their credit report, and the landlord just got a house $60,000 below market so everybody wins.

Remember, when your house goes all the way to the foreclosure sale where you lose your house and the bank takes the best of your property, at that point the foreclosure on your credit report can drop your credit maybe 150 to 175 points. That is a lot. With a short sale, the bank will put it on your credit report in different ways. They might put short sale, they might put satisfied, they might put satisfied by a short sale so when we are negotiating with the bank we ask the bank to put it down on the credit as being satisfied. That way, it looks as if the homeowners sold the house and satisfied the loan.

Mosca: In your book you talk about the biggest mistake new investors' make is offering too much for a property. Can you speak to this aspect of the process?

Bent-Twyford: When we do short sales, we only offer the bank 35- to 40-percent of the retail value. With a $200,000 house that is actually worth $200,000, my first offer would be $75,000 or $80,000. I know that seems really, really low but as I'm going through my short sale process, I'm going to submit information to the bank, I'm going to present a really good package. I'm going to show the bank all the reasons why they should take less on my deal right now as opposed to letting it go to the foreclosure process, possibly bankruptcy, eviction and a month on the market once they try to retail it. I'm going to try to build a case and show them all the reasons why they should take less than try to buy that house for 50 percent of the value.

Mosca: What makes up that good package? How do you make it so the bank will work with you?

Bent-Twyford: First, we don't want to be doing any sprucing. Remember, I'm trying to get the bank to take less than what's owed. We don't want anyone to be painting and sprucing and making it look any better. I want it to look as bad as possible. The gist of it is when we put a package together, we actually put together and prepare three offers. On the $200,000 house, again as an example, I know I'm going to offer $80,000. I may come back on my second offer and raise it to $92,000.

Then, with my third offer, I really want to try and buy this house so I offer $100,000. I'm going to raise my offer a couple times, so I'm leaving room to negotiate and appear flexible. I'm going to actually present three independent packages, each one from a different point of view. My first package is going to be all about the homeowner, their distress, what's happening in their lives, any disrepair their house might have and anything that might help build an emotional attachment between the bank rep and my homeowner. Then when they come back with a counter offer, I'm going to talk about the area, the market, all the things on the news, the bailout and all the bad things. Then when they come back and I go in for my final offer, I'm going to say this is my last offer and present to them a timeline that lays out how much money they are losing since the very first missed payment.

Mosca: Understanding that particular market is valuable because while you're paying $.50 on the dollar, in your example, the market might actually be worth .38 or .43 cents on the dollar.

Bent-Twyford: Absolutely. A lot of times when we do short sales the bank will take so long to get back to us that by the time they get back to us, we have to go back in and lower our offer because the offer of $100,000 was good three months ago but now I can't pay more than $85,000. One of our goals in having the three package concepts is to get through those three offers inside of 30 days and try and get the bank to say "yes" now, not in three months.

Mosca: what is your golden nugget?

Twyford: My nugget is for the homeowners. If you're a homeowner, do not let the banks bully you. Banks are in no position to pull you right now. They don't want your house. They are not in the business to own real estate. They are in business to lend money. They have so many properties right now and are not in the position to be bullying you around. Call the banks up and work something out.

Published: January 22, 2009

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Peter L. Mosca is president and founder of BAK Communications, Inc. He has over 22 years of communications and media consulting experience, serving a variety of nonprofit organizations, including the CCIM Institute and the REALTOR Association on all three levels – national, state and local. He is the Spokesperson Trainer for the CCIM's Jay Levine Academy and trains hundreds of residential REALTORS nationwide to be effective industry spokespeople. He is consistently ranked as "excellent" by about 90% of those who attend his presentations. While his principal consulting focuses are public speaking and media relations development and content delivery and management, Peter is also the host of the Voice America Network's weekly radio program, "Income Property Investment Talk," a one-hour program that brings the powerhouses of commercial and residential real estate to property investors every Wednesday at 11 a.m. EST. Peter is married 17 years to his wife Barbara. They have two children: Ashley, 15 and Kelli, 12. Hence, the name BAK Communications, Inc.