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A property owner who misses several mortgage payments has a pre-foreclosure grace period of a few weeks to a few months -- depending on the state -- to bring the payments up to date and stop any foreclosure proceedings. If the owner does not bring the delinquent payments up to date, the property will be sold at a public auction, which is announced via a Notice of Trustee's Sale (NTS) or Notice of Foreclosure Sale (NFS).

NOTE: Buying foreclosure properties at the courthouse steps can be challenging and the most risky option because:

• You are competing with seasoned investors who track the auctions daily.
• You will likely have to pay cash for the property, because financing an auctioned property isn't possible in many states.
• You may not have much time to research the title and condition of the property beforehand.
• If there is a money encumbrance attached to the property -- a tax lien, a mechanics lien or a second or third mortgage -- you, as the new owner, will have to pay it off in full.

Here's how to buy a house at auction:

After you find a property, drive by it to get a better idea of its condition and neighborhood. This could facilitate a casual meeting with the owner (you may be able to still work out a last-minute deal before the auction) or yield a wealth of unexpected information from a talkative neighbor. Take pictures and notes, but the owner may still be living in the home so be discreet.

2) Confirm auction status, date, time, location and requirements. After a property is scheduled for auction, the owner has a chance (typically less than a month) to stop the auction by paying the amount owed to the foreclosing lender. Auctions may also be postponed without a new date being published. Cancellations and postponements are announced at the time and location of the originally scheduled auction. You can find out beforehand by calling the trustee -- the person or party (often an attorney) who is filing the paperwork to initiate and carry out the foreclosure.

Location: Most auctions are at a public place in the same county where the property is located. In many states, all the auctions in each county are at the same location. You can typically get that information from the trustee or county clerk. If you call the county clerk, make sure you clarify that you are looking for the location of mortgage foreclosure auctions, not tax foreclosure auctions.

• the full amount they want to bid in the form of cash or cashier's check, or
• a certain percentage, usually 10 percent, of the bid amount in the form of cash or cashier's check (like a deposit), and pay the remainder of the amount within a certain time frame if they are the highest bidder

The opening bid at the auction is based on the total amount owed to the foreclosing lender and may include fees incurred because of the foreclosure proceedings. If no one bids above that amount, the foreclosing lender will take possession of the property.

The bidding procedure varies from state to state, so educate yourself with the procedure in your area before bidding at an auction. Observe a local auction, ask the trustee or consult a local real estate agent or attorney.

• Outstanding loan balance
• Estimated market value (calculate estimated house market value)
• Other property liens and loans the owner may have taken out
• History of ownership
• Your monthly expenses as a homeowner (mortgage payment, taxes, insurance, repairs, etc.)

Subtract all your costs as a buyer (loan balance, additional liens, repair costs) from the estimated market value of the property, and use that number as a basis for your bid. This is all public information so you can research on your own with the county recorder, consult a local real estate agent or use online services like RealtyTrac.com.