Does supply and demand come into play here as there are many foreclosures happening? A report from a foreclosure listing service indicates that foreclosures were up 94% from the same period last year.

This is not breaking news to any of us; the disaster has been widely reported, however figures such as a 94% increase are still quite shocking and really serve to reinforce the tragedy and its consequences. One of the consequences may be that as a prospective home buyer you may find a home you can afford.

However, it is not as easy as it sounds. Many of these homes are offered with a 'foreclosure' discount, it is true. (Usually, the more foreclosed homes on offer then the larger the discount). Perhaps the biggest problem you may have to overcome is the fact that the family who have lost the home may still be living in it.

These homes are usually sold at auctions to the highest bidder offering above the debt owing. If the lender is selling it as an REO (real estate owned) then you will be dealing directly with him. If you work with an experienced realtor or a foreclosure specialist, you can avoid problems and you will find that there are many bargains out there.

Beware of the type of mortgage referred to as toxic; this is often a plan with no down payment deposit and paying off the interest only. Choose a reliable lender and consider a fixed rate that you know you can afford to pay.

So, if you can bring it all together and buy a home, what happens if the family are still living there, in effect - squatting.

Usually when a home comes up for foreclosure, the sad truth is that the family have usually run themselves into the ground trying to keep their home. They often have no money and no place to live; it can be very upsetting for you to enforce their leaving the property.

There are companies who will look after this type of task if you do not have the heart for it yourself. If you feel you may need to do this, you will have to allow in your budget for a bailiff's services.

You may be lucky and buy a home that is not occupied. If you are not, I would advise that you pay the professionals. Trying to take care of the emotional disaster of a family unwillingly moving out, could really mar the pleasure of a new home for you.

However, it is a wise business move to buy when the market is low and with professional help you can be guided you through the process so that you can avoid any pitfalls.