When buying a distressed property in Spain you have a number of points at which you can try to secure the property.
The first point is when the current owner is experiencing difficulties but before the bank starts any action (where a mortgage is involved). The owner may be willing to drop price significantly to avoid repossession being instigated particularly if they are a Spanish Resident.
The second point is when the bank has first started action but before the courts become involved. At this point any price agreed would have to at least cover the banks loan and be in agreement with bank to delay further action to allow sale to take place
The third point is at auction; once the court action has been started it is very difficult to halt and auction must take place. At auction, you could buy property for 75% of the auctionable value as recorded on Nota Simple. This will normally be 75% of original valuation.
The fourth point is after auction and before the bank has to take property over. At this point, a bank may be willing to part with property for below the actual mortgage amount outstanding rather than take over responsibility for property, pay transfer taxes and have to maintain property until a future sale. This point is ideal for cash buyers who will get best price possible.
The final point you can buy a distressed property is when the bank has taken into onto their books. Some banks appoint their own agents and often these properties can be seen on banks websites. At this point the bank will be looking to cover loan plus any costs associated with taking property over so price almost certainly will have increased. It is however possible to negotiate and the bank may also provide a Spanish Mortgage at loan to values not normally achievable, to allow the property to be moved on quickly.