Buying a Foreclosed Home: How a Foreclosure Sale Works

Buying a foreclosed home can be a good way to score a deal while hunting for real estate. A foreclosure is a house whose owners were unable to pay the mortgage or sell the property. As a result, the real estate lender assumed ownership and is now trying to sell it to recoup some of its costs, typically for an attractive price.As of 2026, foreclosures are now about as common as they were in 2019, but well below the levels seen during the Great Financial Crisis.Currently, the national foreclosure start rate stands at 0.24%, roughly matching the 2019 benchmark, according to Mortgage Bankers Association data reported by Moody's.A new report from Realtor.com® tracks the recent trajectory of foreclosures, with Chicago, Philadelphia, Houston, Baltimore, and Phoenix seeing the most foreclosure listings as of June 2026."Buyers since 2023, when home prices flattened off, are most at risk," says Realtor.com senior economist Joel Berner. "They’re newer to their mortgage and don’t have as much of an equity stake in their home, partly because the first few years of mortgage payments are made up of significantly more interest than principal and partly because their home has not appreciated as muc...