Function

• The purpose of buying a foreclosed house is to save money. When a homeowner does not make his monthly mortgage payment, his mortgage lender has to foreclose on the property. The lender then takes the property and tries to sell it to recoup its losses. The lender may sell it for below market value just to get rid of the property. If you can buy a foreclosed home, you can often find a quality property that you may not be able to afford otherwise.
  
  

Time Frame

• The process of buying a foreclosure can take much longer than buying a regular house. If a property is owned by a bank, you have to submit a bid to the bank for it. The bank could take some time to review your offer and make a decision on it. Some people have to invest months of research and submitting bids before they finally secure a foreclosed home.
  
  

Auctions

• Many foreclosed properties sell through home auctions. Immediately after a property is foreclosed on, the lender will generally try a property auction to sell it. An auctioneer is brought in and the sale is advertised in the newspaper for several weeks leading up to it. You could potentially buy a foreclosed property through this method although you have to be careful doing so. With this option, you have to have the cash available and you have to make sure that you do not pay too much.
  
  

Assistance

• To get the best deal on a foreclosure, it may be to your advantage to hire a real estate agent. In some cases, real estate agents know about foreclosures before they go on the market. If a real estate agent has a relationship with a particular lender, the lender may give the agent an indication of a good deal before anyone else knows. By working with a real estate agent, you can increase your odds of finding the right property.
  
  

Cash

• When you buy a foreclosure, you may not be able to finance it through the regular channels. This means that you may need to have enough cash on hand to pay for the house. If the house is in disrepair or it is a new house that was not yet finished by the builder, you could have to pay cash to secure the property. This limits the number of people who can take purchase these types of properties.