The residential real estate market provided a hay day for innovative real estate investors, home sellers and smart home-buyers for many, many years. But with that incredible expansion, that was in part spurred-on by incredibly affordable home loans and creative financing which included ARMS (Adjustable Rate Loans) that enabled some home buyers to "move-up into a larger home and/or more desirable neighborhood, many of the adjustments without buyers having refinanced into fixed rates occurred at the same time home builders and lenders began seeing and responding to corrections that began appearing across the nation in almost every market. Some economists in retrospect state that the "housing bubble" was inevitable based on the theory that "what goes-up must always come down".
But as with every dark cloud comes a silver lining. For residential real estate that silver lining came in the form of a turning of the tides for home-buyers, once the underdog in residential real estate transactions and in the form of more reasonable opportunities for real estate investors, through the addition of a landslide of real estate opportunities now being negotiated, not in the traditional means as had been over the past six years i.e., negotiating directly with the homeowner and /or his/her broker but now in involved REOs and Short Sales, which some now estimate to be every third house listed for sale on the market. Through these opportunities home-buyers who had previously been "priced-out" of what they felt were reasonable home buying opportunities can now experience incredible housing acquisitions if they are: prequalified with a strong lender that has the ability to perform, they have done their homework and fully understand what they're getting into +/- (REOs and Short Sales aren't for everyone, particularly those with tight deadlines and acquisition expectations) and if home-buyers have the patience and persistence to "endure" what can be an incredibly long and arduous process, with no guarantee in the end, that the "process" on a given property will actually result in a closed transaction.
I ran across a great article on REOs and Short Sales by Kiplinger which provides a concise, broad summary of both home purchasing avenue. Click here to read it in it's entirety.