What is an REO property? · After a borrower fails to make mortgage payments for a certain period, a lender can begin the foreclosure process. · The lender issues. Purchasing a Foreclosed Home. If buying from a bank, you'll need to sharpen your bargaining skills and start the process with a lowball offer on the property. Buying a bank owned home has its advantages. opportunities that are not available in the pre-foreclosure and auction phase of the foreclosure process.