There are many posts on this subject in this forum on this subject and you could search for them. Here is a short version of the definitions.
Preforeclosure - Before foreclosure - the homeowner is late on his payments and the bank is starting the process of exercising their collection rights. Preforeclosure actually starts the minute a homeowner defaults on their mortgage payments, long before the Notice of Default (NOD) is filed, but most people don't give it this title until the bank has actually files the NOD. During this period the homeowner can negotiate with the bank to stop the foreclosure process, get a loan mod, refinance, pay the delinquent amount, negotiate forebearance, sell their home, etc. (owners rights and remedies) It is a time of choices and will last at least 121 days in California.
Foreclosure - Some people begin to refer to a home as "in foreclosure" when the Notice of Trustee Sale (NTS) is filed. This is a 21 day notice that the bank intends to sell the home on the courthouse steps at a Trustee Sale or Auction. Up until 5 days before the auction the owner can still exercise any and all of their rights and remedies. Mnay people use the term forclosure for the entire 121 day period (and technically this is correct). Some people don't use the term foreclosure until after the Trustee Sale (which is technically wrong). Many people use the term to refer to the home once it is bank owned.
REO - stands for real estate owned. This is a home which is owned by the bank who acquired it through foreclosure.
Short sale - This is simply the sale of a home for less than the amount owed the bank. Some of these homes are in pre-foreclosure and some are not. Also note, not ALL homes in preforeclosure and which are listed for sale are short sales (although some realtors will tell you differently). The homeowner is selling this home, however, the lender must approve receiving the sales price as payment in full on the outstanding mortgage loan. The short sale process is NOT short. It can take 60 - 180 days to get the bank to approve taking less than they are owed.
Bank owned - the same as REO, and for some people the same as foreclosure.
Hope that helps. You can look at some of the other post on Trulia (including my own) for more information on this subject, or you can contact me directly through my profile. Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes Realty