There has been a lot of debate about weather or not this is a good time to buy a foreclosure. Companies are coming in and doing bus tours and auctions are popping up all across America. The answer to this is an easy one if you live in a bubble area. NO!!! Now might be the time in depressed areas like Detroit where the average home now sells for under $30,000. And No that's not a misprint. Under 30 grand!!
The reason why you need to wait on buying foreclosures is because many of the banks have only marked them down 10-25%. Many are buying thinking they will be able to flip them for a quick profit. This will turn out to be a fools game. Foreclosures will continue to dramatically rise as the housing crisis deepens and another $460 billion of subprime resets in 2008.
Banks will be forced to start pricing more aggressively as they hold onto more properties because it ties up their capital. They need to sell these homes to free up cash. The more properties they hold, the more they will have to move in order to keep their capital ratios in tact. When this tidal wave of foreclosures hits, the banks will be forced to sell homes for whatever they can get for them in order to stay solvent.
I wouldn't even look if they are offering you a 20% discount. Buying a foreclosure right now in a bubble area would be like buying a house in 2005/06.
I expect you will see foreclosures at least 50% off on average and even more if its a condo or an area that has huge inventories. If you waited this long to buy a home you can wait another year. Look at Detroit. I am sure the speculators there have been buying "foreclosures" all the way down to 30K. If you live in California or Florida don't be the sucker buying at the foreclosure "peak". Take a ride on the foreclosure bus tour in 2009/2010. You will be glad that you waited.