Chris Earl, agent for Stephens Real Estate, is representing the owner of a home that has been foreclosed on, and now is going through a waiting period in which the owner can buy it back by satisfying the debt, plus fees and interest.

All this national talk of a suffocating credit crunch, compounding mortgage defaults and tumbling real estate prices has potential homebuyers angling for value.

Chris Earl understands that.

But the concept of buying a “foreclosed” home in the Lawrence area, he said, comes with a healthy dose of fine print that many folks haven’t taken the time to comprehend.

“They think they’ll get the $135,000 house for $75,000,” said Earl, a Realtor for Stephens Real Estate in Lawrence. “Unfortunately, it doesn’t work that way very often.”

Earl, who figures he fields three or so calls a week from people interested in buying a foreclosed home, and others in the business often find themselves deflating buyers’ visions of scooping up nice homes at cheap prices.

Instead, he said, buyers often find themselves coming up against relatively cumbersome processes for even securing the rights to buy such a home in deals that may not close on time or even close at all depending on a variety of players in the process.

Take a home at the beginning of the foreclosure process – one being sold at a sheriff’s sale, offered only to “cash” buyers who line up as competing bidders on the proverbial courthouse steps.

To buy such a home at a foreclosure auction, a buyer must make the highest bid, have cash on hand – or, at a minimum, a letter of credit from a bank showing that the money could be turned over immediately – and be willing to buy the place without ever setting foot inside or having the ability to require repairs should a later inspection turn up problems.

Oh, and the homeowner – or a third-party buyer who acquires the homeowner’s rights in an earlier transaction – can buy the property back within as many as six months or even as long as a year after the auction date, no questions asked.

Such uncertainties often turn potential buyers off from the foreclosure process, Earl said, because few people have the means to cut a full-price check the day of the auction, then let the money sit while the original homeowner’s “redemption” period lingers.

“Ninety-five percent of the population is not capable of buying in that manner,” Earl said. “You typically can’t go to your bank and get a letter that says, yes, you can bid $150,000 and you can have the money in an hour, and that you’ll take the house the way it is, no matter what condition it’s in.

“But because that’s difficult, that might be where you could get a good buy.”

Even for those fortunate enough to grab a “good buy,” the deal is by no means done.

Eileen Foy, a property appraisal and liquidation specialist for the Internal Revenue Service, recalls a foreclosed home selling for $17,000 at an auction. The new buyer was tickled to be picking up the property, which had been expected to fetch at least 10 times more.

Then the IRS, holding its own redemption rights, soon called off the sale, knowing that the agency was owed more than $17,000 and certainly could get more at a later sale.

“We went and tapped them on the shoulder and said, ‘Yo, you could offer us something (more),'” said Foy, who was in the area recently to auction another taxpayer’s assets in Overland Park. “We said, ‘See ya. Here’s your money back.'”

After paying back the new buyer’s $17,000 purchase price, plus fees, the agency ended up selling the place later for $175,000 – and that sale, too, had been subject to another 180-day waiting period under which the taxpayer could have bought the home back.

Linda Trotter, a Realtor for McGrew Real Estate in Lawrence, was among more than 100 agents who attended a recent Kansas Association of Realtors seminar regarding foreclosures, short sales and related issues – an indication that such conditions continue to gain attention in professional circles.

For most of her clients, Trotter said, the effects of foreclosures on homes to be considered for purchase comes at the end of the process. When a property clears its redemption periods, the home can hit the market just like any other home.

Then it’s up to the seller – often the bank that held the foreclosed mortgage – to decide whether to accept less money than what remains on the mortgage itself.

That’s what happened recently in Trotter’s neighborhood, when a $400,000 home went for $340,000, likely because the bank didn’t want to keep the debt on its books, plus all the costs of paying insurance, mowing the grass and other expenses.

“That’s (the deal) most people are looking for,” Trotter said.