As a potential buyer, expanding your search to include all homes for sale can only be in your favor. Representation in any transaction is critical, but representation in each of these cases is critical. Taking the For Sale by Owner, the seller may not have a complete understanding of disclosure laws, buyer and seller rights, statutory requirements, etc., not to mention the pricing issue raised in the previous answer. Be aware that while foreclosures on the face seem like opportunities, bank-owned properties somewhat unique. Banks are often slow to respond to offers, and you will likely be expected to accept the home "as is". For instance, we are currently representing a buyer in the purchase of a bank owned home in San Diego. The bank specified in the contract that no repair work would be done, yet the home need thousands of dollars in termite and repair work. Further, the property was advertised as having air conditioning, yet it has none. These may be seemingly minor points if you feel you are getting a great price, but they are issue you need to be crystal-clear on as a part of the decision to consumate the transaction. The importance of thorough inspection during escrow and an agent ensuring not only that you receive the full disclosure to which you are entitled (either at the outset or through the disclosure and discovery phase) but agressive advocacy during the process is paramount.

The single biggest drawback regarding searches for FSBO and foreclosure can be the lack of representation and guidance the home receives. Many time this can lead to improper pricing of the property and lack of critical disclosures. The buying process can be very dangerous with both FSBO and foreclosures if you are missing representation that will prevent you from making huge mistakes.