The headlines are ominous: some 243,000 foreclosures in August, up 36%
from July and 115% from August 2006. There's blood in the streets.

So how do you get from "there must be bargains out there" to "how much
will I save, and where are the best bargains?"

You should guide any buying decision as much as possible with the
facts. But while lots of foreclosures are out there, how good an
opportunity they might be is hard to know.

RealtyTrac, the same real estate portal and analysis group that
supplies monthly national foreclosure statistics, also calculates the
average discount-to-value by market -- that is, how much foreclosed
homes actually sold for vs. their estimated market value in their
markets. So -- bingo -- you've got a good indicator of how good an
opportunity you're looking at.

Search on "foreclosures by state," and then click "view (state)
foreclosure trends," and you'll get a nice snapshot of foreclosure
filings, actual sales, average sales price and -- most of all -- the
discount-to-value.

National trends

Nationwide, in the three months June through August, some 68,426
foreclosed homes sold in 2007 vs. 54,886 in 2006. The average sales
price dropped from $271,000 to just over $239,000.

The discount-to-market ratio increased slightly from 76.42% to 77.68%.
How do you read this ratio? It is the actual foreclosure sales price
compared to the perceived market value of the home. So 77.68% means,
on average, you'd get just over a 22% savings or "discount" on your
foreclosure purchase. That's down from just over 23% a year ago.

The best (and worst) around the country

So, now the fun part: a state by state look at where the best deals
and biggest changes are happening:

>From June-August 2006 to June-August 2007, California, Nevada,
Michigan, Massachusetts and Arizona showed the greatest increase in
the number of foreclosure sales, while New York, New Jersey and North
Carolina posted the biggest decreases among states that had 1,000 or
more foreclosure sales.

But while California heads the list in sales, the discount is
relatively small -- one of the five smallest in the country at only
17%. The best deals are in troubled Rust Belt or manufacturing-centric
states -- Alabama, Pennsylvania, Indiana and Ohio.

States with largest discounts

Average foreclosure sale price - Average % of market value
Alabama  $133,834    59.95
Pennsylvania  110,936    61.68
Indiana  99,255    63.50
Ohio  90,300    64.70
Missouri  144,768    67.25

States with smallest discounts

Average foreclosure sale price  - Average % of market value
Hawaii  $657,211     85.41
Washington  288,397    83.68
Virginia  338,912    83.48
Massachusetts  290,835    83.03
California  437,813    83.00


Finally, trends are interesting: Discounts are increasing in
Midwestern states and in New Mexico, while decreasing some in Alaska,
Iowa and Texas. This may be a sign of strengthening real estate
markets in those states -- or weak market values to begin with.

State  Average % of market value - Discount increase (decrease)

Louisiana  74.04     15.88%
New Mexico  72.59    12.01
Minnesota  72.79    10.50
Indiana  73.52    9.82
Alabama  63.50    7.48
Alaska  82.02      (8.03)
Iowa  77.32        (5.34)
Texas  78.75     (4.82)
Kansas  74.03   (4.56)
Hawaii  85.41    (3.47)


These facts will help you know how much to pay -- and to know if
foreclosures are right for you in the first place. They may also say
something about which way the market in your area is likely to go.
Either way, they will help you find the "real" deal.