You've already been given great advice, so I'll just give you some links to banks' REO sites. Many banks have them; you can try Googling the bank's name + REO, and it will often pull up the site.
Before I provide the links, I want to say that you should take to heart what my fellow Trulians have told you about foreclosures. I know the "foreclosure frenzy" of right now has many people thinking they are going to strike it rich with bargains of the century, but a majority of the foreclosures right now are the result of adjusted ARMS and upside down mortgages. The banks are already holding loans that are larger than a property's market value, so getting them down to bargain prices won't always be the easiest thing to do.
Anyway, here are the bank links I have:
Most foreclosures are in WORSE condition and have HIGHER list prices than equivalent motivated owner homes. This is why you should want to compare regular listings with Bank REO's. If you look only at Bank homes, you are likely to overpay
Lots of ways.
Many banks list their homes with Real Estate agents for sale. Lots of those properties DO make it into the MLS. Experienced agents know what brokerages specialize in the sale of bank owned properties. I know that I keep a prospecting search for properties that come on the market from these agencies so I can get quick notice of properties that come up for sale.
For example, the most recent property to catch my attention was a new listing that I received notice of this morning. It's a single family home in the West Loop - three beds with one bath - listed for $149,900. Before being taken back by the bank, this house was listed for $325,000. Could be a great deal if it's not in too bad condition.
A year ago, I sold a condo owned by Chase Bank to a home buyer in a well known high rise in Edgewater. This condo was purchased by a rehabber who ran out of money and couldn't make the payments on the condo. My client bought the condo for a nice discount and renovated it completely and he has a spectacular and comfortable home in a desirable lakefront location now.
These homes are not always a bargain, however. But careful examination of the listing data and a tour of the property will usually reveal a few diamonds in the rough. Do hire an experienced agent to guide you. A good agent will be able to sift through the mountains of data and suggest properties that represent good values as well as point out the pitfalls that may be present in other properties.
Keep in mind that the foreclosure process takes a long time. By the time a bank actually owns a property, it could have been neglected for many months. Some properties are in good condition, but others are waiting their date with the wrecking ball.
The process of bidding on a foreclosed home takes guidance and patience. Many levels of bureaucracy can be involved in the sale of a bank owned property. If you submit a bid on a property, the paperwork goes through a maze of bank departments and mid-level administrators before a decision can be made. It often takes weeks to hear about the status of an offer. These nerve-wracking waits are not for the faint of heart.
One last reference for the determined do it your selfer: Check out the Chicago Foreclosure Report at http://www.chicagoforeclosurereport.com. This website offers a web and magazine subsription to properties that are just entering the foreclosure process. You'll be doing all the legwork yourself, however. No experts are guiding you here, so be very careful. But if you can get a jump on a property before everyone else does, the effort could be worth it. Lots of Realtors read the foreclosure report, too, because it's a great prospecting tool. Properties listed in the Foreclosure Report are not yet bank owned and are often still in good condition. The owners usually still live in the properties. Smart sellers who are in financial trouble are wise to list their homes for sale with a broker at this stage in order to perhaps sell the property at full retail price.
Good luck hunting down your great deal!
How a REO is listed actually depends more upon the bank that owns it. I went though a list of REOs about a year and a half ago and got phone numbers and a few websites of the different banks and Fannie Mae. If you would like my Excel spreadsheet on that, just email me and I'll send it to you. But as Ute said, don't limit yourself to REOs. You are better off finding a motivated seller listed through a Realtor.
Just click on the picture to link to my profile to email me if you would like.