Short sales and foreclosures are not for the faint of heart. On the upside, you can get a serious bargain. The downside is that short sales are complex and time-consuming, and foreclosures frequently require extensive renovations.

Before you even consider taking the plunge, understand what the terms mean. Such homes are generally in better shape than foreclosures, because the owners still live there and are responsible for upkeep.

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But they can take months longer than a normal transaction because the lender must agree to the sale. Other liens—unpaid association dues, for example, or a second mortgage—need to be cleared up. And even after all that, the bank may balk at the last minute.

Foreclosures move faster, but properties may be in bad shape, neglected or even deliberately damaged by their owners.

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But these vacant homes close quickly, since banks have already taken care of any outstanding liens and set a price. The most experienced agents have completed a certification program, such as the Short Sales and Foreclosure Resource SFR offered by the National Association of Realtors. Your browser is out of date.

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On the upside, you can However, they also come with a few potential pitfalls.