The 3 most popular ways to buy foreclosure homes are preforeclosure, at the auction, and as an REO (real estate owned) from the bank after the real estate auction. Preforeclosure is the stage when the homeowner is issued the notice of default from the bank letting the owner know that the foreclosure proceedings are starting on their home. At the auction occurs on the court house steps when the bank is preparing to take the home back into its inventory. If a bidder is present that offers the bank more than what is owed on the mortgage the bidder will get the house. The third & final way to buy a foreclosure home is as an REO directly from the bank. The majority of these homes are listed on the MLS by a Realtor. More information on buying foreclosure homes can be found here http://www.usnews.com/articles/business/2008/02/13/3-key-ways-to-buy-foreclosed-properties.html