Bank foreclosures occur when a homeowner fails to make continuous payments on thier home. Common reasons for a foreclosure are because of reasons like personal insufficiency or a sudden failure in the job. After the foreclosure process, the ownership of the home is completely transferred to the bank, and the previous home loan is voided. The bank then has two choices, to keep the porperty on the books as an asset, or try to sale the home (usually at a deep discount). A home that has been foreclosed on is often called an REO home, short for Real Estate Owned.

Real estate owned homes are also a very preferable option because they are priced very low. With the help of Real Estate Agents and Mortgage Brokers who are specialist in working with banks in a real estate transaction, home buyers can learn a lot about buying foreclosure properties.