I think you were looking at RealtyTrac--it appears that they might be a big advertiser on Trulia.
Anyway, from experience, the amount you are looking at is just the default amount, even if it tells you it is an asking price. We know that no home in Berkeley will be selling for $87,000 (unless maybe it's only land), but even then, the figure you are looking at is the default amount recorded or published.
The catch? It is so you could subscribe to the membership to find "other deals". Your best bet is to work with an agent who specializes and has worked with foreclosure or bank-owned properties. Also, keep in mind that there are also auction properties; there are various types of auction properties. The two main ones many people hear about are: 1) trustee sales and 2) bank-owned auctions. There are currently both types.
The second type of auction is usually heavily advertised with infomercials, booklets and "Open House inspections" (I've participated). The first type of auction requires you to have great connections because properties could be taken off the auction block on the day of the auction. Even then, you need great connections for the second type as well because you won't have to compete with thousands of buyers if you knew about these properties before they go to auction.
The buying part is another process.
My specialty is negotiations with lenders on short sales - although I am not taking on any new clients at thsi time. I have successfully negotiated hundreds of these in the past few years. While most agents close 15-20% of their short sales, I have a close rate of about 80% when teaming with experienced agents.
So to answer your question:
On a short sale (or pre-foreclosure sale) 99% of the time the selling agent has little or no experience closing short sales and thinks they can low-ball the value. The fact is that the lender wants market value. So unless the lender has already established the value of the property and has already had an "interior inspection" or BPO (broker price opinion) that meets up with what they are advertising the property at - the price won't fly.
However, if this is an agent that has closed at least 4-6 short sales in the past year and already knows what the lenders value is and/or already has a WRITTEN lender approval letter from both lenders (if there is a first and second) then you have a good chance of getting this done and quickly.
The good thing about short sales is that most lenders will pay 3% buyers closing costs and many other costs as well as 5-6% broker commissions.
There are some great answers as to why they may be advertising the property at the price that you have seen. Lots of wisdom here!
Foreclosure sites are notoriously bad with their info. Guess what their main focus is: selling their service at $10 per month or so.
What site are you looking at for the list of homes? Some sites tend to lure buyers in without disclosing all the information. As was mentioned in an answer below, there can be more than one loan on the property and were the property is in the foreclosure process can make a difference.
Buying foreclosures can mean getting a great deal, but buying a foreclosure can be very different from purchasing a home from a buyer. Typically disclosures are minimal for these properties and are usually offered "as is". Different banks selling these properties can have different expectations when working with buyers of these properties.
If you are thinking of purchasing foreclosed properties it is best to work with a Realtor who is knowledgeable of the process. It can be more difficult to navigate these purchases, but if you are working with someone knowledgeable, they can guide you through the process.
I am currently working with other buyers who are purchasing foreclosed properties, so if you would like to discuss further, please contact me at Lisa@LisaCartolano.com
Alain Pinel Realtors
Vist my Blog, Real Estate News Without The Schmooze at http://www.NoSchmooze.com
1. REO (Real Estate Owned, by the Lender) or already foreclosed
2. NOD (Notice of Default). Lender has issued Notice of Default to Owner who has missed several mortgage payments.
2. NOT Notice of Trustee Sale - Foreclosure. The property will be sold at auction.
The price all depends on the property. I can see where you can buy a foreclosed home for $200K --- there are quite a few in other parts of the Bay area like Oakland, San Lorenzo, San Leandro, Hayward. There may even be some in Berkeley. But are they fixers? Are you buying the tax certificate instead of the property itself?
Better yet, ask a REALTOR to work with you. Give them the specifics of what you're looking for and he/she will be able to give you a list of possibilities, take you to see properties, check out the financial situation(loan owed), write offers and negotiate for you.
Buying a foreclosure isn't as easy as some people think. You should know going in what to expect --- and this is accomplished when you make site visits. A realtor can take you to these properties and let you in.
If you are getting the default info from the newspaper, this is the First step in foreclosing the house. The 87,000 might NOT be the total amount owed on the house. This might be the second loan, 3rd loan and so on and so forth. The best thing is contact a friendly Agent and find out the whole deal about the property you are interested in. It might need some more research and if it involves the title company, your agent must be able to help you.