Foreclosed homes are a great way to get a wonderful home at a discounted price. There are several things to consider when looking at buying a foreclosed home. The type of foreclosure, what part of the foreclosure process the property is in, and the age and upkeep of the property as well.
There are several types of foreclosure depending on where the default happened and how the lender handles it. Judicial foreclosure is more expensive and is done under court supervision. It is available in all states and required in many. Non-judicial foreclosure requires a power of sale clause in the mortgage or if a deed of trust with that type of clause was used. Most common are bank foreclosure and government, or tax, foreclosure. Bank foreclosed homes are normally in very good condition, the owner just fell behind on and could not catch up on mortgage payments. A tax foreclosure is normally for the same reason except it is due to not paying the taxes rather than the mortgage.
You can buy a home at any point in the foreclosure process. If it is a pre-foreclosure, you buy it directly from the owner like you would any home and this ends the foreclosure process. Auction is next, with this you can get a good deal but many times cannot look at the property first. Once the foreclosure process is complete you can buy it from the new owner. If the bank ends up with it you can get it for normally around the same price that the bank got stuck with, sometimes half the worth of the property. This is because banks are not set up to be able to own property and they try to get rid of it as fast as possible.
The age of the property and the condition it is in should also be considered. If it needs a lot of work it may be more expensive to fix than to buy something a bit more expensive and not have to worry about a lot of repairs.