2nd Realty Trac can somewhat mislead potential buyers thinking they can purchase a 4 bedroom home for $75000 in a $600000 neighborhood. Just because someone is in default does not automatically mean they will foreclose. Several of those in default have actually paid up to restore their account.
Banks are NOW cooperating more . How much will they negotiate down, well they may not depending on what it is listed for and what the market has really been going for in the neighborhoods. On the other hand they may very well negotiate lower. Each case is different and if you find a home you like throw them an offer.
Your best bet is to sit down and write out what you want in a home and the price range you have been approved for and see what area or community will fall into that price range and from there determine which homes to go look over.
First of all, each bank seems to work in a vacuum. Some seem more mtivated to get rid of foreclosed properties than others. Many banks take a week or more to even respond to an offer. Often much, much longer with short sales. Most are not willing to make a significant reduction. After all, the agent who they have chosen to list the home gave them a market analysis to show what it should sell for (!)
Having said all that, are you looking for the best deal or somewhere you really want to live? In my view, a home is much more than just an investment. If you are asking the question because you want to buy an investment property (rental), ten fair enough. Otherwise, focus on getting the home that best suits your needs and then work on negotiating the best purchase price.
FOR ALL OTHERS: The only "sellers market" in america is the foreclosure market. Don't expect any deals from a foreclosure as the bidding process brings 20-30 people to bid on almost every deal. A deal that was already priced at market.
It's easier to get a deal by going to a realtor, asking them to find the oldest property on the market and start dropping discounted offers. In addition, you won't have to wait 30-60 days to hear an answer.