While some homes are foreclosed upon by various government agencies and end up selling as HUD homes, a majority of them are foreclosed upon by banks/lenders and end up selling as REO homes. However, homes which go through bank foreclosures can be bought at various stages of the process.

After a home owner regularly defaults on making the mortgage payments, a notice is given to the home owner by the lender which mentions that if the default is taken care of in a timely fashion, the house will be out up for sale at an auction.

A home owner can choose to sell the house during pre foreclosure to fix the default. If the home owner manages to clear the outstanding debt on the mortgage during pre foreclosure, the foreclosure proceedings can be stopped. Instances of home owners accepting close to half the property’s value are not unheard of. Of course, deals like these do not take place everyday, but 10 – 20% discounts are commonplace.

Once a house is foreclosed upon, an attempt to sell it at a public auction is made. Unless you have thorough knowledge of the process, foreclosure auctions are best left to the experts.

Deeds/titles of foreclosure homes that pass the auction stage without selling are passed on to the lenders/banks that hold the respective mortgages/loans. This is when the home becomes a Real Estate Owned (REO) home. Banks always want to avoid the costs that are incurred in having to maintain a foreclosed property. This is why they are always in a rush to sell of these homes.

Buying foreclosed homes through banks is considered to be a safe option. This is because banks generally take care of the past arrears that are linked to the home; these include secondary liens and unpaid taxes.

While banks foreclosure homes are known to offer some really good deals, it is imperative that you inspect a home before making an offer on it. Inspecting the home will give you an idea of the repairs and renovation it needs and this will help you reach a more informed decision.

Looking for homes involved in various stages of bank foreclosures has been made quite simple, thanks to the internet. Local news papers are known to carry foreclosure listings as well. Alternatively, you can get in touch with banks and they would be happy to share their foreclosure lists with you.

Try and utilize all available resources before you make your decision. And remember; do not shy away from taking professional help at any stage.