1. Interest rates are EXTREMELY low and with prices where they are, there are a lot of buyers out there. Rents increased over the last two year so this is a prime time for people to move from renting to buying. Bottom line - you are competing with more buyers than a year ago.
2. Foreclosure sales are in high demand and many are snapped up by cash buyers and investors. Banks often list these properties at below market value to incite bidding wars. Bottom line - you'll have to compete with several offers on the same property.
3. Short sales are a slow process and you should expect an approval to take 3-4 months. You may not hear much in the meantime. Bottom line - you'll have to be patient, even after the seller has accepted your offer.
There are many challenges in today's market. Make sure you are working with a professional who has experience dealing with foreclosures and short sales and can guide you every step of the way.