If you haven't contacted my colleague, James (great agent), I can also help. I worked nearly exclusively as a Fannie Mae List Agent from 2009 to 2013 and closed 150 homes, from Fannie & other banks and negotiated some short sale listings along the way.
So, I know the process in and out- when they are likely to do price reductions, who calls the shots and what the motivation is as the asset manager goes through inspection/repair negotiations. I've also seen some unreal sale scenarios to know what the pitfalls can be and how to avoid them.
That being said, frequently the drawbacks on an REO, like giving up most of your rights for recourse if something goes wrong, can outweigh some of the benefits (namely the price) when the prices really aren't that much of a bargain. REOs in many cases can be listed for as much (or more) than other comparable listings. Please take a look at a blog I wrote a number of years ago: http://www.camilleswanson.com/2011/01/29/want-a-good-price-on-a-hassle-free-purchase-consider-the-traditional-seller/
Since REOs make up a small portion of our listing inventory in Maricopa county (785, or 3.5%, of 22,176 actively listed), you may be looking for a needle in a haystack and miss some other great opportunities.
Whatever you decide is best, I know I can be a good resource to you. All the best!
Realty Executives - Paradise Valley