Look at all homes within your budget. There are good deals to be purchased that are foreclosures, short sales and owner occupied homes. The condition of the home matters more than who owns it.
Let your realtor guide you to the best options for you. Thats our job.
Foreclosed properties from HUD can be purchased with as little as $100 down with an FHA loan and will pay up to 3% of your purchase price in closing costs. The properties that qualify for this will have (insured or insured with escrow) in parenthesis next to the property... you can find these properties on the hudhomestore.com.
Other than these benefits alot of foreclosures are sold so that you are walking in with immediate equity.. but you need a good Agent that is experienced with foreclosures and make sure you are not getting in over your head on repairs as the previous Agent informed you of... this again is can be helped with an experienced Agent and Inspector.
There are many other types of foreclosures.. these are just a few.. feel free to call for more information.
Cammyhinson.ReeceAndNichols.com (Search for homes here)