What is the difference between a SHORT SALE and an REO?

A short sale is a property that is being sold for less than is owed on the property so even though the property is still owned by the person that is selling, the bank (sellers mortgage holder) has to approve the sale because they are taking a “short” payoff.

An REO is a property that has been foreclosed on and now the bank owns the property.

The biggest difference is that on a bank owned REO, you can actually buy it and close on it within days. On a short sale, you may go to contract and not hear anything for months and then the response from the bank can be a higher price than full listed price, or you may not get a response at all.