As Scott notes, it could be sold at auction (in which case "the market" is the auction). However, more often, the bank takes the house. Then at some point--generally a few months later, it lists the property with a Realtor in the area. And so it comes on the market just like any property, except the seller is the bank.
Tip: Any Realtor can set up an alert on the property so that once it comes back on the market, you'll know immediately.
A short sale is what my husband and I did on a home about 4 years ago. You will get the home cheaper that what the owner owes on the home it affects you none at all. Only the seller. Our credit show we paid our home off but on a short sell meaning the bank agree to take less than what the owner owes. The bank will have the home appraised. And go on that selling price. And they only have 90 days to sell the home before losing it. GOOD LUCK IN YOUR NEW HOME... more