A short sale occurs because the amount the owner owes on the house outweighs the house’s value. Owners can avoid foreclosure by going this route, which impacts credit scores less than foreclosures. Short sales are often priced lower than comparable sales.
Foreclosures occur when owners default on the loan by missing multiple payments. The bank publishes the notice of the foreclosure auction.
If the house does not sell at the auction, the property becomes bank owned. At this point, the bank will list and show the house just like the owner would have had he been the one to sell it. The bank can choose to evict the owner or allow him to continue living there until the house sells.