Distressed properties are still being pursued by homebuyers but there has been a shift from REOs to short sales. REO sales have decreased from 670,000 in 2009 to 500,000 in 2012 according to RealtyTrac. There is buzz on the streets that banks are encouraging homeowners currently in default and near foreclosure to pursue short sale alternatives instead of foreclosure. Some banks are even offering up to $30,000 in financial asistance throught a Cooperative Short Sale program and the Home Affordable Foreclosure Alternatives (HAFA) program. By selling homes with these short sale programs, the foreclosure process is temporarily halted during the process.

According to an article in Forbes, Short sales of homes not in foreclosure were up 17 percent from 2011 during the third quarter of 2012.  RealtyTrac data shows these short sales accounted for an estimated 22 percent of all sales during the quarter, while the pre-foreclosure sales accounted for nearly 10 percent and the REO sales accounted for nearly 10. That brought the total distressed sale share to 41 percent of all residential sales for the quarter. This demonstrates that a large number of properties that would have been foreclosed were instead converted into short sales.