New to short sales - how much to pay?

New to short sales; had an owner touch base with me (first call of my first ever newspaper ad) in August and wasn’t motivated at the time; wanted to move in December and was one month behind in payments.
Flash forward to last night; now we’re in October and the 1st mortgage holder is moving to get the stay from their Ch. 13 bankruptcy removed so they can foreclose on their home. Now my phone is ringing. . .
ANyway, they owe about $250K in mortgage, attorney, court fees and arrears on the 1st mortgage. 2nd mortgage is approx. $45K last time we talked (a month ago). So you’re looking at roughly $300K. Property comps in the area are at $300K, and this house needs about $25 to $30 K of work - electrical cords dangling from ceiling in the crappy basement, etc. They have a Ch. 7 bankruptcy hearing on Monday.

This would be my first short sale attempt ever and I’m in Maryland with the SB-761 foreclosure law so I’d be acting as a consultant.
Should I pass on this or actually try it. What is the chance of the bank accepting this? I’ve heard the 2nd mortgage doesn’t have to accept the short sale even if the first does, and if the second doesn’t - that’s means the first can’t anyway.

How much money should I spend on this? Someone here in my area told me to get an O & E title search done. THen move to a BPO if there is only a 1st and 2nd and no other liens, judgements. But here in Maryland, the owners can recind our consulting agreement at anytime and even if I have an end-buyer lined up, they have a 3 day recind period in the purchase contract also. I don’t want to front money - large sums - that I may not recoup.

Those of you that have done this. . . tell a newbie straight; should I pursue this or not?
All advice welcomed.

I wouldn’t spend any money on it. You can get comparables and a title abstract from an agent/title company. In the purchase/sales agreement, include a contingency for anything else showing up on the title. You don’t have to pay anything to the second mortgage holder up front - they get paid at closing just like the first.

If the seller rescinds, all you’ve lost is time & effort.

As far as how much to offer, I just posted this in another thread:

Yeah, I agree not to pay any money up front but my problem is that I’m a newbie and I don’t have a relationship with any title companies yet because I haven’t closed any deals yet. Believe me, I’ve called around and asked about getting encumberances for free in exchange for doing my closings, etc.
So I guess it’s a personal decision as to whether I want to invest in a title search up front; it needs to be done.

I don’t have any direct contacts with title companies either. BUT - I’ve developed relationships with a couple of RE agents who have contacts at the title companies. The agents get the title abstracts from the title companies for free. I’m still pretty new at this myself, but I haven’t had any difficulty getting this kind of help from agents.

Good point. I’ll see what I can do along these lines - in fact, a neighbor 2 doors up just got his RE license with Long and Foster. Any tips for “breaking in” hungry, new agents? (ha ha!)

Offer a referral fee or listing after you get your deal and need to sell. ( this is a good place to start).