There's one question I get at least a half dozen times a day. (Used to be about once daily, but as foreclosures mount, so does the number of folks asking the question.) "Can you get a really good deal buying a foreclosed properfty?" Well, the answer is, "Maybe." I usually reply that it all depends on many factors. Is the property already foreclosed and owned by the bank? If so, how long has the bank owned it, and how large is that lender's foreclosure portfolio? What condition is the property in? How much did the bank have to write off when they foreclosed? If it's NOT yet owned by the bank, but only facing foreclosure, is the mortgage a first mortgage or a subordinate one (second, third, etc.)?

The reason for all of these questions is simple. Depending on the answers, a buyer can sometimes get an excellent deal at far below market value. However, if the answers are not the right ones, that same investor can find himself owning a real "Money Pit" (apologies to Tom Hanks and Shelly Long).

If the house hasn't yet been foreclosed upon, you may be able to make a deal with the owner, and how good a deal that is will depend on your abilities at bargaining, as well as the abilities of the seller. If it is going to be sold at public auction--the classic "auction on the courthouse steps"--the chances of your getting a good deal depend on how many others are seeking the same thing on that same property. More bidders usually means a higher price.

Also, in an auction situation, you probably won't have any opportunity to do inspections, nor get a list of disclosures about the property from the owner. It may be in fabulous shape....or all but falling down. You could find yourself the winning bidder, but on which mortgage? If it's the first mortgage, you don't have to worry about subordinate loans, as they're usually wiped out by the foreclosure sale. Except for IRS and judgment liens, you own the property free and clear. If, however, it's the third mortgage, you also own the property--and the priviliege of owing and having to pay the former first and second mortgages. You need to do your homework. A title company or real estate attorney can help you with this task.

More tomorrow.