REO - Short for Real Estate Owned. The property is now owned by the bank as a foreclosed property. Buying an REO property is actually just as easy as another other real estate transaction, but you usually have to buy the property AS-IS. In other words, don't expect the seller to make alot of repairs. Sometimes this can be a problem if you are getting an FHA loan.
Short Sale - the current owners owe more on the property than it is worth in the current real estate market - thus "selling short". The bank and the investors must approve the sale and all the conditions, often taking 3-6 months to finalize decisions and creating a very long transaction period.
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