Distressed property is not as prevalent as is has been in the last few years but there is still a bit out there. Below are some short definition of terms and links to outside information that's important to understand weather you are buyer or selling a distressed property. Of course this is not legal advice and you are free to contact legal / tax advisors based on your individual situation.
Unfortunately this does not refer to the amount of time it will take to close the transaction. The term Short Sale refers to selling the property for less money then is owed the lending institution and asking the lending institution to approve the sale. This process can take from 2 – 6 months depending on the bank, the sellers, and the underlying lean holder.
When making an offer on a short sale property the buyer needs to have patience as the sale needs to be approved by the seller and the bank at a minimum. There are often other approvals required based on the type of loan involved and the number of lien holders.
For sellers… patience and an understanding of the consequences on credit and taxes needs to be fully understood.
Below is a link to information from the State of Washington regarding Distressed Property transactions:
Bank Owned (REO)
These properties have already gone through the foreclosure process. The lender owns the property. The property is usually sold "as-is" (no repairs will be done) but you can always have an inspection and ask. We've been surprised.
Buyers are dealing with the lending institution or a property management company appointed by the lending institution. Negotiations and timeframe to close are very similar to a traditional purchase.