Great time to be buy --- prices are lower than they were 2-3 years ago, interest rates still some of the lowest in 40 years. As a first time buyer, I hope you have a realtor representing your interests as your advocate.
As far as short sales and REOs are concerned....how prepared are you, as a first time buyer, to tackle a challenge?
For short sales, it will take 45 days or longer for the lender to respond to an offer, regardless of whether or not the seller has accepted your offer. It is the lender who makes the final decision. Even if the seller accepted your offer, if another offer came in while you were waiting for an answer, and that offer is better than yours (price, terms), the lender can override the seller and accept the other offer.
As for REOs, don't expect to get any credits for closing costs or repairs. They are always AS IS sales, don't have any reports to share. UNLESS --- the property was listed before as a short sale, and the previous listing agent was able to put the disclosures online somewhere. Have your agent research the information. Although they take a shorter time to process, banks have very specific instructions that you must follow to the letter.
Also, some, not all, REOs have been trashed. Remember, people are being forced out of their homes, and they are not happy about it. As such, they may not have taken care of the property, they could have stripped the house of anything that is not bolted down. So buyer beware!
BUT! Most REOs are priced very aggressivly --- find out what the bank paid for it, then you can submit your best and highest offer. You can still negotiate, but don't think that submitting an offer 40-50% less than the listing price will have a chance.