Hi Home and thanks for your question.
To be frank, I've sold both foreclosure and short sale homes to buyers just like you, and they are seldom in "bad shape" today--that was certainly not the case about 2 years ago, but today, both banks and sellers are learning the lesson that abandoning the property has greater consequences than simply a loss of price. For the most part, most sellers know that it is to their advantage to help the home get the highest possible price, so short sale homes are often maintained, but not necessarily completely improved.
Foreclosure properties, as one agent already noted, can be either cleaned up and improved by (often) the listing agent or bank, and while it can be missing appliances, most are in good and serviceable condition with some areas that need repair due to neglect. Depending on the length of non-occupancy of the home, the condition may be better or worse than comparable foreclosure homes in the area. Again, most foreclosures are cleaned up but seldom improved often due to lack of funds by the sellers.
Most importantly, Home88, you can greatly minimize potential problems during and after the sale by working with a qualified and experienced agent familiar with both foreclosure and short sales home purchases.
Grace Morioka, SRES
Area Pro Realty-PC