The additional 20% has to be paid from the previous owner, so if we won a bid for $5000. And one year later the previous owner wants his property back he would have to pay us $6000 which would be 20% on top of the $5000 bid we won.

Yes that is kind of the idea, since people probably want to keep their properties. They are given one last chance to buy it back, but at a 20% premium.

If this was not done, many people would not take a chance in buying these properties. As there would be no benefit to the investor if the previous owner wants to buy it back.

Hehe yeah I can see how that looks, it does seem kind of fucked up. But otherwise these properties would sit vacant and just break down over time. So by selling them to someone that can keep them up they are saved.