Question
We just bought one of the many foreclosures here in socal.  Our lawn is completely dead and dried out.  What needs to be done to redo the lawn.  We would like to do it as cheap as possible with as good of results. We have plenty of time so no need to rush anything.  As far as I have been told (by random coworker) we just have to rototill the yard, then add compost to it and rototill that into the yard with it.  Spread the seed, and water.  Sounds easy enough, if true. Thank you for your time and help.

Answer
You can spread seed or sod. I recommend sod where possible because it is more forgiving of mistakes. For example, if you miss an irrigation on sod you can make up for it. But miss an irrigation at the critical point of germination and you risk total loss and will have to reseed. Here are my recommendations to another enquiry which was similar to yours.
[From what you say, your best plan would be to rip it all out and re-sod. You know how expensive it is so you want to guarantee success.
As you rip out the sod try to estimate how well the previous sod rooted. If it was not well rooted, then maybe the ground was too hard and/or dry. You would do well to rototill the surface lightly before sodding. Also make sure that you can water the sod twice a day for the first two weeks and then once a day for the next 6 weeks.
Before you lay the sod dig down to about 12 inches in 4 or 5 spots (a post hole shovel works well). You will be looking for grubs. If you find them in more than half of the spots you dig, then you will need to control. Grub control has to be precise in choice of chemical and time of treatment; do not be shy about seeking professional help because you will be spending a lot and you will want to take care of the problem comprehensively. If you have to control grubs, I do believe that the treatment should take care of all other harmful pests but please check that this will be so. A soap flush (again in about 4 or 5 spots) usually tells you whether you have any other insect problems. Mix 2oz. of lemon-flavored dishwashing liquid into 2 gallons of water and pour the mixture over 2 sq. ft. of lawn.(2x2x2) SLOWLY! Because you want the liquid to seep downward into the ground.
After a few minutes, living things will try to get up and out of the area. You will want to trap and identify all. If any are harmful, you might want to apply a product to kill them.
A broadcast application of "Milorganite" will provide the right stimilus for the grass roots to grow into the soil; you want this to start happening from day one.
Ensure that you get fresh sod; jam the pieces in tightly as you lay them; this creates a solid barrier against any weeds that might want to grow. Stamp on the pieces as you go unless you plan to roll the whole area at the end. This helps the sod to make firm contact with the ground. Water the whole area well; watch for water running off across the sidewalk and stop watering if it occurs. Allow the water to soak down into the ground and water again later... and again later until you are quite sure that at least the first 6 inches of the soil is wet.
In the next several days, examine the area carefully, especially along the seams of the sod pieces. If they start pulling away from each other, or curl upwards, they are drying out. Water and fill the spaces with sand. If the grass blades roll up, you need to water. If they turn brown, you are too late with watering. Water early enough in the morning and late enough in the afternoon to avoid the water being evaporated by the hot sun. But water early enough in the afternoon so that the grass blades are quite dry before the sun sets. This helps to prevent fungus.
There, I've given you the best advice I can. If you follow it the mistake(s) of the previous effort may be averted. But a mentor reminded me often that "Mother Nature bats last".]