Foreclosure

The legal process by which a lender takes possession of a property when the borrower defaults on the mortgage.

Two flavors: judicial foreclosure (court-supervised, slower, common in tenant-friendly states), and non-judicial / power-of-sale foreclosure (faster, common in TX, GA, NV, AZ). Timeline ranges from 90 days (non-judicial) to 2+ years (judicial in NY/FL). Investors buy at three stages: pre-foreclosure (directly from the distressed owner, often a short sale), at the foreclosure auction (cash, no inspection, riskier), or post-foreclosure (REO from the bank). Each stage has different risk and pricing dynamics.