First, let’s understand the difference between a short sale and a foreclosure.
(For a more indepth explaination on both, please click the links below.)  

A short sale occurs when a property sells for less than what is owed on a mortgage(s). In order for a short sale to close successfully, the lien holder(s) must agree to forgive part, or all, of the note the seller signed. Be aware there may be other lien holders involved besides the primary and secondary lender, such as condo or HOA associations, taxing authorities or even some utility companies, such as the Loxahatchee River District. 
A title insurance policy issued to you as a buyer from a reputable company is a must.
In a foreclosure, the lender or lien holder has already taken title to the property through the legal process. Although some foreclosures sell for more than the list price, you usually have a better idea of what the titleholder is looking for as far as a price to close the file. Such isn’t the case on a short sale. I’ve seen many offers on a short sale that satisfy the owner, but the lender would not agree to the same price. Prices are often times artificially low to attract an offer or offers, which is a requirement of most lenders to even open a short sale file. One must also be prepared to wait two months to 4 months for an answer from the lender on a short sale; and that’s assuming the seller has provided the forms and information the lender requires. Many times this isn’t the case, the seller or lender is uncooperative or lackadaisical, and everyone wastes their time.

If you are under a time constraint to move, be very careful about your time limits. Also be aware of the stipulation some lenders have, an requirement of multiple offers. While multiple offers do occur on many foreclosures, it’s usually a much quicker turn around time than a short sale. Still one must consider if he or she wants their offer used simply to increase the other offers. Yes, it's a dirty part of the business, and it happens every day.
On both short sales and foreclosures, I strongly recommend an inspection, since you will be using a standard “as is” contract. Should you find a serious problem with the property, it allows you to cancel the transaction. Remember, the lender who owns the property in a foreclosure never lived there, and are much less liable than a seller who is familiar with the property. On a short sale, a desperate seller may not always be forthcoming with all the latent defects of his property, as hard as that is to believe.
So, are they a great deal or not? Every property is different; some can be a good opportunity, others nothing special. It can be a lot of work on your part, and more on the part of the Realtor. Be prepared to furnish plenty of information if you plan to finance, and proof of funds if you pay cash. After wading through the vast amount of forms, disclosures, addendums and requests, some buyers get frustrated and regret their decision to pursue a short sale or a foreclosure.   In our South Florida market, you will be seeing this for a while however, so it’s best to know what you can expect should you decide to pursue a foreclosure or a short sale.
You can find more information on the foreclosure process here. 
You can find more information on short sales here.
And one last thing, please don’t ask me how people can buy a house for the back taxes of $875 here, even if the guy on the TV at 4:00 AM guaranteed it. You need to buy his seminar to get that answer.
Tom Copeland
Tom Copeland
275 Toney Penna Dr #8 Jupiter FL 33458