When a property owner is no longer able to make payments on their home loan, the bank that extended that loan is forced to get its money back by taking the property. This action is called 'foreclosure,' and it means that the bank assumes ownership of the property. Next, the bank will try to sell the property at an auction in an effort to recover the amount it loaned.

Potential buyers may want to offer the bank much less than the home's value, with the hope that today's depressed housing market will force banks to take a loss. These  "low-ball" offers generally do not go very far. Banks publish their requirements for an offer-to-purchase alongside each property listing.

Many banks are retaining most of their foreclosed properties because there are so few good bid offers at the auctions.

A potential buyer is free to make a low-ball offer, but they are well-advised to remain flexible and be ready to negotiate. Buying a foreclosed home can present many challenges, and requires a great deal of patience.

Find a good real estate agent. The Propeum™ real estate network of professionals can explain the government auction process, help buyers during the purchase process and work closely with the bank to make sure all needs are met.

Buyers should choose a real estate professional who is very knowledgeable about the residential areas of interest. A good agent will be able to show you a mix of privately owned homes, and properties that are held by banks.