Pre-foreclosure

• This involves buying the home from the owner before the bank has foreclosed the property. Usually this is not a sale as such but rather a transfer of ownership and of the obligations of the mortgage, meaning the new owner does not pay any cash to the former owner. The new owner will need to be approved by the mortgage lender and pay off the overdue part of the mortgage balance. This amount will depend on the size of the mortgage and how far behind on payments the original owner was.
  
  

Auction: Deposit

• Once a bank has foreclosed on a home, state laws usually require that the home be put up for public auction. Only if this auction does not raise enough to settle the outstanding debt does the mortgage lender take full legal ownership
  
  The winning bidder will be required to pay a deposit immediately after the auction. This deposit can be a percentage -- 10 percent is a common figure, some states such as Florida require only a 5 percent deposit. Other states require a fixed deposit, such as Arizona, which requires $10,000.
  
  

Auction: Other Costs

• Usually the buyer must pay the full balance of the sale by the end of the day of the auction. For this reason prospective buyers either need a large amount of cash on hand, or a pre-approved mortgage.
  
  Some auctions will require the buyer to pay a transaction fee of a few percent.
  
  

Real Estate Owned Property

• This is where the house does not sell at auction. The bank then sells the property through a broker. This works in a similar way as normal real estate sales, so any required deposit or downpayment depends on both the seller and any mortgage provider.