Best Cities for Trapped Homeowners

This is a double-edged sword for both homeowners and lenders. Those scrambling to unload a speculative property for a loss need their lender to sign off on the short sale. If more is owed on the house than it's worth--what's known as negative equity--banks lose more money by letting the transaction occur.

"If the equity in the house is sufficiently negative, there may be an incentive for the household to engage in a short sale," says Sanders. "But the more negative the equity, the less likely the lender or servicer will be willing to agree, since it increases the loss."

Though with the number of foreclosures most lenders are rolling up, forgiving some debt from a trapped flipper is fast looking like a better alternative than going through with foreclosure and being stuck with the property.

Best to leave that for a short-sale buyer trying to time the market's bottom.