There's an old saying "it's an ill wind that blows no one good," and that's especially true today as the real estate market begins to decline in many parts of the country. As many homeowners begin to feel the pinch and edge closer to foreclosure, the potential for investors to buy those homes through a short sale becomes more tempting.

However, short sales aren't for everyone. They can be frustrating, even when they go smoothly, but they can turn into nightmares if you don't avoid certain mistakes. Here are some examples of mistakes many short sale investors make.

1. First, they low-ball their offers from the very beginning. Remember, lenders aren't ignorant of a property's value and they have little incentive to take anything other than the smallest loss they can on a property. Have all your facts and figures in hand before you talk to the lender. They're business people, after all, and have no personal or emotional interest in the property. Their job is to recoup as much of the original investment as possible, so make your offer as tempting as you can while staying inside the profit guidelines you've established for yourself.
2. The second mistake is not being thoroughly familiar with the short sale process itself. Lenders are busy and they don't have time to explain the process, so you need to impress them that you know what you're doing. Many colleges and institutions are beginning to offer short sale courses, and it will be well worth your while to take one or more before you stick your toe in the short sale water.
3. There's no substitute for actually going through the short sale process yourself. Every lender will have different rules, regulations, and paperwork, so you can never know everything about what you're going to encounter.
4. Another potentially devastating mistake is not having a handle on what's owed on the property. If there are several loans, you'll have to work harder to make your deal fly. If there's only one loan, the process will go smoother, but always know the financials about the property before you make an offer.
5. The final mistake is to forget that real estate is cyclical. It's always gone through boom and bust cycles and always will.