But can you clarify for others that may have the same question. When you state foreclosure purchase, is the house going through the foreclosure process (not an REO or bank owned property), is it a short sale (the seller is offering the house for less than what they owe on the property) or is it an REO or lender-owned property?
One thing that will definitely be beneficial in this market is having proof of funds or at least a prequalification letter stating that you have the capacity to buy the house. Many lenders (for REO properties) are not even looking at offers without proof of funds.
For short sales, patience and determination are key. While you have a role to play in the short sale as the buyer, the key is for the ability for the seller to demonstrate to the lender that they will not be able to obtain a sale price greater than their loan balance and their hardship.
There are several key questions to keep in mind when buying a foreclosure:
Having worked with banks on both seller and buyer side, my experience is that banks conduct the homeselling process very differently than individual home sellers and buyers. Banks tend to be irrational, and not on the same time schedule as the rest of us. If you make an offer on a bank-owned property, be prepared to wait. If you can't deal with living in limbo for weeks at a time, you might want to re-think it.
It is true that many foreclosures provide good opportunities for investment, and for instant equity, and certainly are prevalent, in many areas, as much as 30% of properties a buyer finds are short sales and foreclosures.
The large number on the market shouldn't preclude you from looking at others, there are some great deals out there that are not bank owned, and you need take into consideration it could cause you to miss other homes while you are waiting to get an answer from the bank. Just go into it knowing that it is a hit or miss, and you will need to be patient.
Consider also that the foreclosure might be in poorer condition, requiring higher costs to get it into proper condition.