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Many of the pre-foreclosures listed by RealtyTrac are only showing the current balance or original balance of the loan that is in default, which is not necessarily a good indicator of the price the lender will ask for the home. If the property does go to foreclosure, in most cases the lender will bid the total debt bid at auction, i.e., the total costs associated with carrying the property to REO. Because the lender incurs legal and other fees when in foreclosure, may have large negative escrow balance, etc., the total debt bid may be much higher than the loan balance that is in default. Further, the borrower may be defaulting on his/her second lien, rather than the first, in which case the second lien balance may be listed by RealtyTrac. If a borrower defaults on their second lien, but not first, the property may not go to foreclosure anyway (second lienholder may try to buy out the first, if it makes sense to do so, simply walk on the balance altogether, etc.). There may be other reasons for low pre-foreclosure prices, such as attempts to short sale, as others have mentioned, but from what I've seen most of the extremely low prices are associated with RealtyTrac pre-foreclosures, and are only indicators of loan balances. Hope this helps! - Mon Jun 30 2008, 18:26