The numbers are huge and growing. Some 5,500 foreclosed, repossessed homes are coming up for auction -- in California alone. That's up from just a little over 1,000 at about this time last year.

I smell opportunity for

The Millionaire Zone

real estate investor.

But you don't just have to be an investor. There are thousands of homes available, and this suggests opportunity also for individuals and families in the market.

Either way, it's a buying opportunity for those who know what they're doing.

By the time a foreclosed home comes up for auction, it's already been repossessed by the bank. That means all stops have been pulled out to rescue the owners. They couldn't keep it, and now the bank has it.

But the bank doesn't want it. Banks and lenders are flush with real estate, because foreclosures are happening everywhere. Real estate, especially in today's market, does not look good on a bank or lender's balance sheet.

So when the ownership clock ticks away to, say, 90 days on the bank or lender's general ledger, it's time to move it at any cost, time for many lenders to put a whole lot up for sale. And many more today are resorting to auctions to get property off the books no matter what.

Therein lies the opportunity.

What's in it for you? As an auction buyer, typically you can get between 10% and 20% off the market price. I've seen some go for as much as 50% off.

Yes, there are risks, the biggest of which, as Warren Buffett would say, is not knowing what you're doing. While well-run auctions allow you to inspect homes beforehand, there's a lot that could be wrong with the home, its history or the neighborhood. And it's easy to pay too much.

Click here for the video version of this story from Jennifer Openshaw.

As in the past, most foreclosures are found in lower income neighborhoods, so the types of property involved tends to be fairly low-end and more suitable for investment than anything else. But foreclosures are hitting the middle- and upper-income tiers too, and it isn't impossible to find some pretty classy places on the auction block.

Here's how to take maximum advantage of foreclosure auctions.

  • Know where to find them. Auctions don't just happen anywhere, any day. One of the largest auctioneers is the Real Estate Disposal Corporation, which holds regional auctions across the country. In late June, REDC will hold a three-day series of auctions in northern and central California with hundreds of homes. Williams & Williams is another large player, specializing in online-only auctions in 19 states. To play regionally, try a Google search on "real estate foreclosure auction." Some portals like Reals.com can help, and for auctions of government-owned repos (HUD or VA), try Foreclosure Repo Auction. If your tastes run more high-end, J.P. King specializes in more exclusive locations, large land parcels, ranches and commercial real estate.
  • Know the rules. When you're dealing with this kind of money, and especially if you have little auction experience, knowing in advance how things work is essential.Typically, buyers will need to bring their checkbook and a cashier's check for a specified amount to use as earnest money for anything they buy. REDC requires a $5,000 cashier's check and, naturally, a valid ID to enter the bidding process.As you bid, realize that the auctioneer charges a 5% bidder's premium as a handling fee for the auction. That 5% is added to the final sale price.If you win, you'll deal with a title company on premises. You'll surrender your cashier's check and write another personal check, in REDC's case, for 5% of the total purchase price, including the handling fee.REDC holds a seminar and practice auction at the beginning, and has staff members circulating through the audience to answer questions. Attending an auction beforehand, just to watch, is helpful as well.
  • Look before you buy. Finally, auctioneers hold widely publicized open houses to allow potential buyers to view the property. It's never a bad idea to look the place over, or to have a buddy or real estate expert in tow to review the upsides and downsides. These previews are held enough in advance to allow research on neighborhoods and price trends, so you'll have time to do your homework.

If you like to buy stuff on

eBay

(EBAY) - Get Report

-- and yes, I've seen a few foreclosures listed there, too -- I'll bet you'll like this even more. There's definitely money to be made.

Jennifer Openshaw, a passionate advocate for helping Americans improve their finances and build their personal fortunes, is author of the hit new book

The Millionaire Zone

founder of

The Millionaire Zone, and

AOL's Personal Finance Editor. In addition to appearing regularly on such shows as Oprah, CNN and Good Morning America, Jennifer is host of ABC Radio�s

Winning Advice and serves as an adviser to some of America's top corporations. Visit her at

www.themillionairezone.com.