No one bid. Watch and learn from auctions that doesn't mean good deals can't be found. Eddie Diaz of Turlock thinks he got one. Two weeks ago he outbid three other men for a home on Walnut Street in Oakdale. The minimum bid was $156,526.50 for the two-bedroom home built in 1910. After about 80 bids, Diaz ended up with the property for $198,500."I'm very good with carpentry," said Diaz, explaining his plans to fix up the home and keep it as a rental.Hope of finding a bargain is what lures people to auctions.In Stanislaus County, there are a few well- seasoned investors who attend virtually every auction, along with a few rookies who mostly watch and occasionally try their luck bidding."If you don't see the big players bidding, there's a problem with the home," cautioned Al Ferreira, owner of California Pacific Brokers in Modesto.Ferreira was a bidder on the courthouse steps for eight years, so he knows the dangers."It's very high-risk," said Ferreira, noting that the worst mistakes are made by those who don't do enough research.One woman thought she got a steal after placing the top bid at a foreclosure sale.

She thought she had bought the home's first deed of trust, but it was the second deed of trust, often called the second mortgage.When the first mortgage eventually went to foreclosure, the woman's second deed became worthless."She lost $100,000," Ferreira said.Absher confirmed that story and said such mistakes are easy to make because legal title recordings can be confusing, complicated and incomplete."There can be a lot of liens," Ferreira said. He cautioned bidders to particularly be wary of bail bond liens because they can signal trouble. "Those houses are usually pretty beat up."And if the home had been used to brew methamphetamines, the environmental cleanup could be very costly.Ferreira no longer bids on foreclosed homes because he's found an easier way to make money: He sells homes on behalf of the lenders who foreclosed on them.Ferreira now lists more than 20 lender-owned properties for sale in Stanislaus and Merced counties, and he expects to list 40 homes by the end of the year."Banks lose money across the board on these homes," said Ferreira, estimating the average loss at $20,000.

The longer it takes for properties to sell, the lower the price lenders are willing to accept.There are options to foreclosure For buyers, however, the best time to purchase a home often is before foreclosure, advised Chad Costa, a Re/Max Executive agent who specializes in marketing homes in mortgage default.Costa mails letters to every Stanislaus County homeowner whose lender has filed a legal notice of default.Those notices are on the public record, and they're the first step in the foreclosure process. Typically, it takes at least four months from the notice of default to the foreclosure sale.In that time, Costa works with owners to find buyers."I tell them they have options and that there are investors who may be willing to purchase their homes for cash," Costa said.Sometimes lenders are willing to accept less than what they're owed to avoid foreclosing, Costa said.

That's called a "short sale." Even though it causes lenders to lose money and sellers to lose their homes, Costa said both are better off than they would be going through foreclosure."Even if your credit report shows you were a few months late on your mortgage, that's better than having a foreclosure on it," Costa said.Short sales also are good for bargain-hunting buyers, and real estate agents predict many more are coming."Banks are going to be stuck with a lot of properties unless they start doing more short sales," agreed Kevin Borden, a PMZ Real Estate agent. "I did a lot of short sales back in 1994 through 1998 ... and I think that within the next six months there's going to be some great buying opportunities."Foreclosure auctions typically are held at 11 a.m. or noon weekdays at the Stanislaus County Courthouse.

Be Careful

The number of foreclosures reported nationwide soared 42 percent in 2006 to 1.26 million, according to RealtyTrac, an Irvine, Calif.-based company that tracks foreclosures. That creates opportunities for more foreclosure fraud, although the exact number of cases is difficult to determine because they are generally lumped in with other kinds of fraud in crime reports.

Just one case:

The Eichers thought they were taking out a $1,700 loan to help them pay the roughly $4,700 in back payments they owed on their mortgage. They learned too late they had signed their house over to Mid-America Financial Investment Corp. and agreed to lease their home from Mid-America when they accepted that loan.

Although the couple no longer owned their home, the mortgage remained in their names, so they made their $554 payments on the loan through Mid-America, along with monthly fees of at least $100.