The housing market in the metro area remains chilly but the submarket of foreclosures is “on fire,” says Jon Wolford, associate broker and manager for Long and Foster in Springfield.

“There are multiple contracts, cash offers — all the things you saw in [the housing boom of] 2005,” Wolford said. “It’s going crazy.”

If you’re looking to buy a home at bargain prices, foreclosed properties sell for about 30 percent below market value, said Rick Sharga, senior vice president of RealtyTrac, which provides listings of foreclosures and other tools via the Internet.

It is important, however, to understand the process of negotiating and closing such a deal before diving in. Buying a foreclosure can be riskier, more frustrating and time consuming than a regular real estate purchase.

There are several types of distressed and foreclosed property sales: Short sales — which occur before a property actually goes into foreclosure — traditional foreclosures, where the house is sold to the highest bidder at auction and an REO or bank-owned property.

A short sale can be the most difficult process. When a homeowner must sell, but the property’s value has dropped so that it is worth less than the mortgage, he can work out an agreement with the bank to accept an offer for less than the amount of the loan. Once the bank agrees, the seller usually works with a Realtor to find a buyer. The final decision on whether to accept a deal, and the associated loss, is up to the bank — so be prepared to wait once you make an offer. The bank may respond quickly or take months to give an answer. Counteroffers can add still more time.

“Short sales can take forever,” confirmed Arlington RE/Max Realtor, Craig Mastrangelo, who offered would-be buyers a tip. If a short sale property has private mortgage insurance, “Don’t touch it,” he said. The bank won’t be inclined to accept a lowball offer if it is still is receiving mortgage payments. Contact the lender to find out if there is insurance on the mortgage.

A Realtor can easily locate short-sale deals for you and you can search databases such as Homesdatabase.com by using “short sale” as a key word. Online services like RealtyTrac, Zillow.com and others offer preforeclosure information.

If a homeowner is unable to find a buyer for a short sale the house may go up for auction.

Auctions at this point in the foreclosure process are typically held at the county courthouse and generally require buyers to pay some or all of the purchase price on the spot, said RealtyTrac’s Daren Blomquist. So check the rules and find out as much as you can in advance about the properties for sale.

There are other types of real estate auctions as well. Counties, the IRS and other government organizations auction property to collect back taxes or recoup losses on loan guarantees. Builders may auction off properties that are not selling quickly. You often can sign up for free auction notices by contacting the organization’s offices or checking their Web sites. Online information providers also offer listings as part of their for-fee services.

With auction properties, you are less likely to be able to get inside to see the condition of the property — or even if someone still lives there. In Virginia, especially, it can be very difficult to get an owner or tenant to move out. Also, watch out for financial surprises, such as additional liens on the property that would need to be paid.

A lender that cannot get the price it needs for a property at auction will often retain the property; at which point it becomes REO or real estate owned by the bank. Local Realtors say REOs are the best opportunities for would-be homeowners. Why? Since there’s no mortgage, technically, the bank can accept any offer.

“There is no equity, there is no loan,” said Rockville realtor Fernando Herboso, of Choice Real Estate. “The bank could actually sell the house for $5.”

Realtors are handling the sale of many REO homes with some agents specializing in this segment of the market. Bank Web sites also list properties for sale and Redfin.com offers free information on bank-listed properties that are not yet assigned to a Realtor. If you’ve been tracking a property and suspect it is in foreclosure, but can’t find a listing, you can research who owns it at the county courthouse and try contacting the bank directly.

There are now enough REO properties that they also are being put up for sale again through commercial auction houses — often under somewhat easier payment rules, said Blomquist. These auctions are widely advertised and online foreclosure services offer information as well.

Inside the District, there are not a lot of foreclosures to be found, as the real estate market has held up better there than in other parts of the metro area. Head into suburbia, however, especially to Prince William County in Virginia, and you’ll find a long list of homes in foreclosure. That area holds about two thirds of the foreclosed properties in the entire state of Virginia.

Almost all foreclosed properties are sold “as is.” but that does not mean you cannot have an inspection done so you know what you are getting into. “Spend the money,” Herboso said. If the house has been vacant for a while, pipes could need replacing or the wiring could be shot.

In Virginia, a statute prevents banks from having to give buyers the standard disclosure of property condition. “Caveat emptor (let the buyer beware) is the heart of purchasing REO property,” says John Thompson, foreclosure specialist and realtor with Samson Realty in Chantilly.

The longer the property is on the market, the lower the price you can offer. Also, while it may seem like you’re getting a great deal if the property is listed for a third of what the previous owner bought it for — be sure to check the home values in the rest of the neighborhood. Realtors can get recent information on “comps” or comparable houses for you and Zillow.com has free maps with estimated values to help you get started. If the value of all the area homes has dropped 30 percent, the deal isn’t that sweet.

How do you compete with investors who may be offering cash? Bring a lot of cash to the table yourself.

“The earnest money deposit speaks volumes,” Wolford said. If you put down $5,000 or $10,000, the bank knows you’re serious and able to pay.

But the best way to compete, Mastrangelo advised, is just to make a ton of offers. “You throw a lot of darts. You’re getting a fantastic deal. But it takes time.”