Looking to buy a home? Be careful of short sales

As the real estate market continues its decline, the number of short sales -- a sale of a home for less than the amount owned on it, with the lender forgiving the differences -- are booming. The National Association Realtors estimates that short sales currently account for about 18% of all home sales nationwide.

While you might be able to find bargains in this segment of the distressed real estate, it can be a minefield full of long waits, confusion, and red tape. In a normal home sale, the buyer and the seller simply have to agree on a price. In a short sale, the institution servicing the loan must agree on the price, and sometimes takes months to approve the offer. If they approve it at all. The Wall Street Journalquotes (subscription required) Molly Kay Hamrick, president of Coldwell Banker Premier Realty in Las Vegas, as saying that 20% of short-sale offers in the area lead to completed sales, compared with 85% for traditional sales.