To expand on good answers...
On ANY lender owned or Short sale, you have to be extremely patient and never set your heart on any one home and being willing to walk away if a deal turns wrong. Using an experienced agent is a huge bonus in this league of buying. There a many risks involved in both types of purchases, have your agent explain in detail what these are and be sure you are clear on everything before proceeding and usually be prepared for somewhat of a roller coaster ride. If you're ready, the payoff can be well worth the ride in the end, I've recently closed 2 very successful buys (my buyers well informed, would think twice about every doing this again but extremely happy with the results!, One was 2.5 months to close the 2nd 2.75 months) and in the mix of 1 sale and 1 buy in this arena. The "buy" is progressing extremely slow but my buyer is willing/able to wait it out and looks promising to close within 1 more month, totalingr 3 months. The 2nd is a sale (short-sale) that received a full price & highest end offer 2.5 weeks after listing, the bank after extensive contact is aware and ready to look at when the foreclosure proceedings begin. It looks to be a very clean sale. I expect from here to be an additional 2 months before closing to allow for appraisals/BPO's/Title/etc to clear, totaling just under 3 months. I know of some lender owned properties stretching to 9 months or more, they are all individual to their own circumstances. On a clean sale with one lender involved be prepared for 2.75 - 4 months to be safe.

In a Short Sale the bank will either forgive the difference on sale or more than likely try to work out an unsecured promissory note with the borrower for this difference, if not will let it go to foreclosure or accept died in leui of foreclosure. Every bank is different on their procedures. The LARGE bank I've dealt with recently 3 times, generally waits until the borrower is in the foreclosure proceedings before ever entertaining the idea of a Short Sale (usually 3 months default); a lot of financial paperwork is necessary and to be sent by an experienced agent ASAP and many times over, with many, many ph calls to boot. Persistance and experience of your agent is definitely necessary on a sale also.

Lots of details on this arena, too many to list and not for the faint at heart. Get an experienced agent that knows your area and trust their judgement and listen closely to them. The deals are definitely there but you just have to be ready for the wait with a trusted agent.

If you need a more definite closing time or not able to play the bank game go with a normal straight sale. The great advantages are: usually in much better condition, they are usually not sold "AS-IS" so if there is any problems that arise, the seller can address them, the closing date set will more than likely BE the final closing date, no per-diem fees for delayed closings, you don't have to deal with a bank who isn't a knowledgable realtor, and many other reasons for paying a little more for security in equity and ease of mind as a buyer. There is something for everyone out there right now, but be sure that if you are looking at the 1st time home buyer credit to move on a purchase ASAP, you need to close by November 30, 2009 to get the free (up to) $8,000 tax credit.

Good Luck to You!

Foreclosure:
Home is “owned” by the Real Estate Owned (REO) division of a lender. Home was taken back from an owner who defaulted on their financing.

Short Sale:
Home is still owned by the mortgagor or the person(s) who took out the mortgage(s) to purchase the home. The mortgagor is having trouble financially and has asked the bank(s) to take a short pay-off of an amount less than they owe on the mortgage(s).

- It often takes 14 days (or more) for the bank to respond to an offer on a foreclosure or up to four months to respond to a short sale offer.

- The advertised price on a short sale property and some foreclosure properties may be far less than what the mortgage-holding bank will accept. (recommendation – as with any other property, do your homework and seek professional advice from a Realtor® to determine how much to offer)

I happen to have written a blog post about that specific issue:

http://www.twincitiesrealestateblog.com/2009/traditional-ban…

If you want to take advantage of the $8k first time buyer tax credit, time is running short and short sales may not be a viable option much longer.

If you need an agent in St. Cloud, I have a couple business partners that can help.

reo and bank owned are the same thing .they are homes that the bank took back and now must sell.a short sale however is a home that the sellor or owner owes more than the value of the home thereforethey need to sell their home at the current value ,needing the banks approval as the bank will berecieving less than is owed on the home . this could take some time in negotiating .

frank

Short sale is when the home sells before the foreclosure auction sale for less than the bank is owed and the bank agrees to take less for the payoff (short payoff). It is very hard to get to authority figures at the banks that can make decisions on the short payoff. REO bank owned is after the foreclosure auction sale and the bank has taken over the property. The bank then turns around and lists it with an agent, this is much easier than the short sale, in my opinion. Check out my blog for more info, http://www.blueribbondurango.com/blog. Unfortunately I'm not in your area so I can't help you out, but if you know anyone looking for mountain property in Durango let me know.