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It is important to understand that just because a property is a short sale or REO it does not necessarily mean that the property is going to be a good deal. Overpriced properties come in all types of situations, what is important is that the buyer spends time researching whether or not the price he or she is willing to spend is justified. A short sale occurs when a homeowner having trouble with payments lists their home at a price less than the amount currently owed to their lender. The selling price is essentially “short” of repaying the loan balance even if the property were to sell at the full asking price . Short sales have been occurring more often lately because many homeowners adjustable rates have made their mortgage payments increase significantly. The problem is, because of the market downturn, many of these properties have more debt than the value of the home, which makes them “upside down”. Short sales require patience as they generally take much longer to negotiate and close. Sometimes it can take over six just to get approval from a bank for a short sale. This is because all banks treat these situations differently and large institutions move slowly. Since ultimately the banks will be the ones suffering the monetary loss, banks have the authority to approve a short sale or choose to go to foreclosure.