Some of the best deals on the market today are Short Sell, Foreclosures and Bank-owned (or REO) properties.  All sound confusing?  Here's a quick and simplified explanation of what these things mean.

Short Sell - This property has a current market value  that is LESS than what the owner owes on the property.  The property is still owned (and usually being lived in) by the owner.  A buyer writes a contract making an offer for the current value of the property and it is presented to the owner who then presents it to the mortgage holder.  The mortgage holder would then have to approve and agree to allow the owner to sell the property for a lesser amount than is owed to the mortgage holder. 

Example:  Owner owes   $200,000, property is currently valued at $175,000.  Buyer offers $170,000.  Mortgage holder would have to agree to accept the lesser amount for the purchase to take place. 

And why would a mortgage holder agree to this?  Well, in today's real estate environment, the mortgage holders know that if the owner lets the property go into foreclosure they risk loosing a substantial amount of money, the property can be damaged/deteriorated, legal fees and extended period of timeetc. before they can re-sell it.