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In addition to a trustee's sale, there are two additional ways to purchase a distressed property:

Short Sale or Pre-foreclosure: A short sale can be purchased using any of the available types of financing. One can purchase using VA, FHA, a conventional loan or cash. In addition, you can inspect the property and conduct a title search so you won't have any surprises. With a short sale, the owner signs over the deed and gives you the property.

A short sale involves two primary processes. First, the home is listed for sale. Once a buyer is found, the owner of the home must submit the offer to their lender plus additional paperwork documenting a financial hardship. The lender will evaluate the property and determine what selling price they will approve. Second, once approval is obtained, escrow is opened and the buying process begins. This process proceeds as with any other escrow. There is an inspection period; the seller provides disclosures; the buyer obtains financing and closes the transaction.

Foreclosures or Real Estate Owned (REO): If the property is not purchased at the trustee's sale, the lender will take the property back and it is now Real Estate Owned. To dispose of the property, the lender will hire an asset management company who will, in turn, select a Realtor in the area and contract to sell it. The property will be placed on the market, in the MLS and advertised along with all other properties in the area. The public record will not reveal that it is an REO. Your agent will be able to tell you. You can then make an offer, as you would on a regular sale, obtain financing and close. You will have an inspection time frame. Inspections are recommended so you will know the condition of the home. You will not receive extensive disclosure information from the lender as the lender will have no prior knowledge.