Foreclosed properties usually sell at "percieved" discounts. They tend to sell cheap, because most owners have already TRIED to sell the home at a price that they felt was what they could get out with. Many times, in my experience, they are homes that have a big flaw, or a couple of big flaws, but at some point in time the owners went out and managed to do a "Cash-out refi" where the bank appraiser simply over valued the property. Now if the sellers need to sell, they can't - they owe too much - and it gets foreclosed on. But the flaws are still there, and so the home reverts to its normal market value minus the (well deserved) stigma of being bank owned. But there are always exceptions, and there are some - very few but some - nice homes that happen to be bank owned. They tend to sell quickly, and for good prices, maybe %5 under market.