What happens more often is the owner of the fore-closed property ends up thanking the buyer for saving him from debtors’ prison.

Foreclosure is the legal process by which an owner’s right to a property is terminated. This is usually caused by an owner defaulting so heavily on a loan or tax debt that  the bank or government steps in to sell the owner’s property to reclaim monies owed.

“The deeper into the foreclosure process the owners are, the more of a discount you can get,” explains Jonathan Ainscow, real estate partner in The Johns. An early stage  of preforeclosure called “financial distress” is when the owner tries to sell a house quickly before the bank or government takes it over, often at a discount.

But Ainscow touts the real deals as being in bank-managed short sales. “Banks are  not in the business of acquiring properties,” explains Ainscow. “Once they foreclose on  a house they want to get rid of it quickly.” Short sale properties can sell for 10 percent below their value.

It’s this kind of foreclosure that Peter Bracher of Dayton, Ohio, bought. “This  guy didn’t pay his property taxes, so the government took over,” explains Bracher.  “It went to auction and we bought it for $15,600.” Though it took Bracher four months of legal wrangling and court proceedings to get the property, he was eventually rewarded for his perseverance.