If you’re looking to buy a home on a budget, the real estate short sale market is a good place to look. Not only do you get homes below the market price, you also get to help troubled homeowners. Sure, there’s always a risk involved when you buy short sale property, but it’s all a matter of planning and smart decision-making.

Below are some things worth keeping in mind to make sure you get the best short sale deal possible.

Take your time: More and more short sales are entering the market as we speak, so it’s a good time to take advantage of your choices. Look into every option and note the pros and cons of each offer. Chances are when you find something good, there’s something better just a block away.

Set a budget: Short sales may offer large potential savings, but regular home buying costs still apply. If you’re buying your first home, make sure to plan for things like closing costs, attorney’s fees and property taxes. An experienced short sale agent can give you an estimate of closing costs so you don’t get caught off guard.

Work with a professional: Each state has a broad network of agents who can help you buy or sell short sale property according to market standards. Not only do they get you a better deal, they also help you avoid common pitfalls such as overpricing or hidden fees.

The government and credit agencies couldn’t just let you take a bath on your home and leave you be. There has to be consequences to doing a short sale, right? Of course there are…  here are a couple of the more common consequences:

Tax Implications – In the event that your lender agrees to the short sale, it’s a good possibility they may be able to issue a 1099 for the difference on your unpaid balance. The provision lies in a section about debt forgiveness. You will want to consult a real estate lawyer who can help you estimate the potential amount of taxes you may owe under this provision.

Credit Issues – A short sale will not appear on your credit report. However, the status of your loan will show up. If you are in default on your loan and you complete a short sale it would be considered a redeemed pre foreclosure. It’s often shown as ‘paid in full for less than agreed’. Creditors will know you completed a short sale and while you may not think its done a lot of damage to your rating, creditors ultimately make the final decision on whether to give you a loan, not your credit rating.