I receive a lot of requests from first time buyers looking for an inexpensive way into the housing market and hoping to pick up a home in the Conejo Valley for dirt cheap, hoping for a foreclosure - one they can actually live in, too! I take these requests seriously and try to educate them about how it works, to the best of my knowledge of course.

First, there are way too many bogus websites out there telling people that you can pick up a foreclosure for $60,000 - for a 4 bedroom home in Thousand Oaks! I hate this and it makes me mad that these scam sites lure people in, get them to pay thinking they are going to get the deal of the century. Well, it doesn't work that way. Typically that $60,000 is what they are behind in payments. I put it to them like this:

Banks are in the business to make money; why would they give something away? Secondly, if their home were worth $600,000 - would they sell it for $60,000? HECK NO!! So, why would you think a bank would do this? Well, they won't, ever.

If you want to buy a foreclosed home, be prepared to pay full market value - and for cash, too. Now, the best way to get a good deal on a home is to look for a "PRE-FORECLOSURE" or SHORT SALE. Again, no guarantees that this will work the same way for everyone, but in the last few transactions I have had with short sales, the banks were willing to take 80% to 90% of the appraised value for the home. HOWEVER, this is not necessarily true for every short pay out there and I don't want a bunch of angry posts on here because it didn't work for them.

It is also a VERY LONG PROCESS with no guarantees at the end; you could wait 3 or 4 months for a response - and have it be no. Typically, the listing agent works with the seller and the bank and lists the home for just under appraised value hoping to sell it for as much money as possible - which makes sense of course. In the event it doesn't sell and is sitting and sitting and the foreclosure date is looming overhead (which the banks absolutely do not want) you have a small window of opportunity to get in there and make an offer to the bank for 80/90% of the appraised value. So, if the home appraised for 1,000,000 - you could POSSIBLY walk away with only spending $800,000 on the home. Again, though, it is a long, slow process with no guarantees - sometimes you have 2 different banks to work with - a first loan and a second loan - and if the second bank does not want to negotiate, or the first bank will not give them anything, they say no and it is all over. Another issue I encounter (well, only with one bank which will remain nameless FOR NOW) is that I cannot reach anyone in the Loss Mitigation Department of the bank and it is just over for the seller and the buyer has waited months for nothing. There are also Short Sale assistance companies out there who can sometimes help - for a price - but it can be worth it to the seller if they want to preserve some of their credit as well as to the buyer who still gets the home at a great price. Again, I am disclosing here that what I am writing is based on my personal experiences - if you want, I can help you buy a great home using my formula but I cannot guarantee it will work. If the bank has had offers higher than the 80 or 90%, it will not work. Just do me a favor and stay off those junk sites, unless you plan to go to the courthouse on sale day and pay with a cashier's check.