Pre-foreclosure indicates that the homeowners have been formally notified that they're in default and that the lender intends to repossess the property, but it hasn't yet been offered for sale. Foreclosure means that the home's ownership has already been returned to the lender. A short sale is when the homeowner sells the property for less than what is owed on their mortgage; this requires lender approval. Finally, if a foreclosed home doesn't sell at auction, the lender continues to own it; this is known as "bank owned" or REO (real estate owned).