Both options give you a great opportunity for saving a BUNCH of money. The major difference between the two is the time frame. I have worked on a short sale deal for over 8 months before it finally closed. I have also worked on one for about 7 months when the bank decided it would rather take the home back then sell it and foreclosed on the home (by the way, it went up for sale 2 weeks later as a bank owned home for $20,000 less then the offer they previously rejected. Man, that was a fun day when I found that out).
Short Sales: Yeah, more like LONG sales! (Get it?!?! What a great joke…)
So they take forever. The bank will not assign the file to a loss mitigator until they have an offer on the home. Not that big of a problem, except what if the offer is $50,000 then the bank is willing to take? Well, you won’t know for 2 months. They have to assign someone to the file (2-4 weeks). Then that person has to order a broker price opinion (2-4 weeks) then you have to wait for the bank to hear back from the agent (1 week) and then they have to make a decision on your original offer (2-3 weeks). And honestly, that timeline is if the bank is on top of things.
I have worked with a bank where they claimed the file was moved to another department. That dept said they didn’t have it. After 2 months of playing phone tag to see who has the file, the original person we talked to had it. Seriously. We’ve also seen banks lose a file after having been submitted 5+ times. And if they are missing one page? They told us to resubmit the entire 50+ page file, not just the one they were missing.
Rant Over.
Bank Owned Properties: (I don’t have any good jokes for this one 
)
Once the property moves from the short sale department to the reo department, things seem to improve greatly. Here is my theory: The Short sale department is charged with getting the most they can for the property, the reo department is charged with getting the bad asset off their books.
Remember the home from before? My guess is that the reo department saw that it had been listed for over 7 months without selling (never mind, that they had plenty of offers) so they assumed that it had to be worth much less then it was currently listed for.
The benefit with working on bank owned properties is that they already know how much they are willing to take. For the most part they are listed where the bank KNOWS it will move. They KNOW they can get a few offers in a few days at that price. Write the offer, sign their required paperwork, and you can close in about 45 days.
Keller Williams Arizona Realty