Curious on why people buy homes before even seeing them?

[John Taylor]

Let me state up front that I am asking this totally out of curiosity! I'm too inexperienced to even consider this but I just wondered how it works. 

You see on TV, and on the internet, where someone buys a home at the court steps or online sight unseen.  How do people make this work. Are they using a a worse case formula that is used to rehab a house based on square footage? For example, do they buy a house that's priced so low they know they can totally redo the home and still break even on a worse case scenario? I just don't understand how even an expert flipper can do this and not lose their shirt 50% of the time?  On the flip side, I'm sure some people have hit a gold mine.