Bhutan-I totally agree with you. Buying a foreclosure is best, but some real estate investors do try contacting people that are in preforclosure and try to buy the home directly from them before they lose it.
This can occur if the homeowners owned the home for a while and had considerably equity. The thing with bank owned foreclosures is that the title is clear and you are not responsible for any liens. However, if you go to a real estate auction at the courthouse steps then you are.
The bank owned foreclosures also have auctions. A company by the name of REDC offers them all over the country. They require a cashier’s check of $5,000 and a buyer’s premium of 5%. This requirement is only if you plan on bidding on a property.
You also have to make sure that you register for the auction and do inspections of the property before you go because these sales are as is and there are no negotiations.