Basics;

 A short sale is a property that is being sold for less than the owners owe on it. In order for a short sale to come off, every mortgage lender and lien holder who holds a debt secured by that property must agree to forgive some or all of that debt. Short sales can, paradoxically, take many months to close, and many never do -- the list price can be bizarrely lower than the actual price the lenders will accept, and lenders can take up to six months to even say 'yea' or 'nay' to a short-sale offer. As such, many buyers and buyer's brokers avoid them like the plague.

An REO is a piece of real estate owned by the bank. These are homes that have gone all the way through foreclosure, and are now owned by the foreclosing institution. REO transactions have their own set of rules, and can be tumultuous, but they are generally feasible to get to close of escrow and sometimes provide a good deal for the buyer.

• NOT a Short Sale or REO: In areas and at price points where the majority of properties are distressed properties, this notation advises you that you are likely dealing with an individual seller. This tips you off that you might be able to negotiate a broader range of terms than if you were doing a transaction involving a bank, and that your escrow will likely be a lot smoother than one with an institutional seller.

• REO: Knowing that a property is an REO from the listing, you know that the seller is a bank or lender of some sort, that they will only sell the property in as-is condition, that documents may take days or even weeks to get the institution's signature, and that the escrow may take awhile to close. Also, the seller is very likely to have a strict addendum to your normal purchase contract that may change the normal terms of sale -- pay close attention to the terms of any such addendum. On the other hand, REO sellers tend to be willing to negotiate on price and to offer significant closing-cost credits and concessions.

• S/S or Subj to Lender's Approval:  All home-buying transactions are subject to the approval of the buyer's lender, but when a listing agent notes that a purchase is "Subject to Lender's Approval," it means that the property is a short sale and the approval of the seller's lender(s) will be required to move forward. Sellers' lenders withhold approval, most often, because they want a higher price, but can also withhold it on various grounds amounting to the fact that the lender feels the seller is not in sufficient financial distress to justify debt forgiveness.

• Short sale already approved by lender: A very small number of lenders will "pre-approve" an amount at which they will agree to a short sale; other times, the property will have previously fallen out of escrow after the bank approved the short sale. Since the worst part of a short sale is obtaining the lender's approval, usually an approved short sale is less problematic than a traditional short sale.

• No reports: This just means that the seller has no inspection reports to make available to prospective buyers; we see this notation often on REO properties.

• As-Is/Where-Is: Virtually all REO sellers insist on selling the property in as-is condition, meaning the buyer must agree to accept the property in exactly the condition and location it is -- if it's got mold, you take it with mold. If it has an addition that is built over the neighbor's lot line -- you agree to take it that way, and to never sue the seller for any damages you incur as a result.