Jim is right. The devil is in the details. Over here, we say "just because it's a foreclosure, short-sale, REO, etc, does not necessarily mean it's a good deal. One thing I learned about economics is the law of supple and demand. I have heard complaints form over 90% of the people who have bought "distressed" properties that though they were getting a "good deal" and it turns out there are title issues, rehab costs too much, leins, and so on. A friend bought a "600k" house for $230k. After months of rehab costs, carrying costs (hidden cost, of course), legal and so forth, he's in for about $550k. So he "made" about $50k. Not a bad return, per se, but also a lot of work, time, headache, opportunity cost (he owns another retail business which has suffered because his time was elsewhere). Point being: after his rehab work and time, coupled with his loss in his other business (increased labor costs, for one), he didn't come out "ahead". What he thought was a "great deal" he could have bought another property without the added expenses.
There are other ways around this, and buying "preforeclosure" isn't the best way because of the "catchphrase of the week".