The legal process when a lender seizes a home if the homeowner is no longer able to make payments on the mortgage. The lender is then allowed to sell the property in an attempt to recover the amount that is owed. The advantage of buying a foreclosed home is the low price, while disadvantages include a sometimes lengthy timeline for purchase, competition from investors who flip homes, and a bad condition of the house.

Read more: Foreclosure? 5 Things You Need to Know