A short sale and an REO are different. A short sale is where the seller owes more than they can sell the home for. An REO is a property that has been through the foreclosure process and is now being offered for sale by the bank.
A short sale does not necessarily mean that the property is in foreclosure. There are instances where the seller has to be relocated for work and is required to move and must sell. There are also instances where the seller is in pre-foreclosure and is attempting to sell their home before it is foreclosed.
In terms of the BPO (Broker Price Opinion), you can have your Realtor complete a Comparative Market Analysis for you so you have an understanding of the value of the homes in the area. This is completed as part of the BPO and is what the bank will use to evaluate the value of the home.
Alain Pinel Realtors
There is no mathematical formula to determine offering price for bank owned or other property.
Properties become bank owned at varying times so there is no straight answer for that. Some banks are 1 1/2 years from default, others are 9 months. Especially when it is a short sale... they get longer period of time. I have also seen many times when houses are slated for auction, they pulled back and extend the time.
Now let us tackle, "how do we find out the BPO from my broker/agent?" You will not find that information out, the bank isn't going to release their pricing strategy to anyone, they are trying to sell the home, not give it away. Chances are your agent doesn't even know the BPO unless they did it themselves. Banks get BPO's from agents whom they have relationships with in that particular community. They pay these agents to go out and complete the BPO for their benefit, not for the benefit of a prospective buyer. Just because it's a bank your dealing with, don't think for a second that they don't have some idea about what the home is worth in the condition it's in. Don't assume that they aren't going to act and behave like any other seller who is trying to make as much as possible in as short a time as possible. If you get a good deal, great, good for you however, just because it's a bank doesn't mean they are wanting to give the property away, they still need to cover cost and if possible, make some money, it is a bank after all.