When real estate property payments are not paid, then the property is foreclosed upon by the bank or Mortgage Company the loan was made through. The property is then referred to as a REO, real estate owned property. If someone is in the market for a cheaper piece of real estate property, this could be a great way to purchase property.
The bank or mortgage company will try to make what is owed on the property; this can be done through a foreclosure auction. These auctions are not always successful because what is owed is usually more than it is worth. If a potential buyer wants to try the auction route, they really need to do research about the local market prices before they plan on buying at auction. The buyer does not want to end up paying more than the house is worth in the current local market.
Another way to purchase an REO property is to check listings of those properties with the banks or mortgage companies and make an offer. Most of the time the buyer is purchasing the property “as is” which means the buyer is responsible for any repairs that need to be done. After the offer is made, it can be accepted or a counter offer is made for the buyer to accept. As with auctions, the buyer needs to do their research in the market(s) they want to purchase in to make sure they are getting a fair deal.