1. Short sale
When the value of a home has sunk below the balance of the mortgage or mortgages on it, owners will often try to get the bank to agree to a short sale.

Under this arrangement, if you make a fair-market offer on a home that is less than the amount owed, a bank can agree to accept this offer and forgive the remaining debt on the property, staving off a foreclosure for the owner.

It can be a good deal if it works, experts say. But getting the bank to agree can be a lengthy and aggravating process both for the seller and the buyer.

“What you are going to find is many potential buyers go into a short sale, then the bank won’t say ‘yes’ or ‘no.’ This can go on for six months where they won’t give you an answer,” attorney Clarke says.

There’s a lot more paperwork for the owner to prove his insolvency, and if there is a second mortgage on the property, you have to persuade that lender to remove or reduce its lien, something that may or may not happen. Short sales do not wipe out these junior liens.

It’s best for: buyers who are in no hurry to move, or investors who are having a hard time finding deals in their community.

By Melinda Fulmer of MSN Real Estate