Really great answers, already--I just had to weigh in, since I've been involved in every possible angle of foreclosed properties. If you're looking to buy 4-5 in Palm Harbor, you do need to be certain you have a bunch of cash--and that it's verifiable and liquid. A letter from your bank or a recent bank statement will be required to place offers.
My last REO listing, which was a well-priced pool home in good condition in New Port Richey, had one full-priced cash offer the first day it went on the market--many of the subsequent buyers who called on it were disappointed when they were told that, particularly the FHA buyers. The house closed in 31 days at 3% over full price.
The point is--do not think that you can lowball offers--the banks hire very astute people to do the research for them, and only the ones in the worst condition end up selling for a fraction of market value.
Does this mean that you can't find deals? Of course not--there are deals in any market, this one is no different. Some of the best deals on homes in the best condition are, in fact, short sales--these are often still occupied by the distressed seller, therefore properly maintained--unlike many foreclosed homes, which have sat vacant for months or years.
Best strategy is, if you do not know where to start--begin with someone who does!