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At least in our area a great many of the foreclosures are in poor physical condition, due not only to neglect, but also code and ordinance violations. Many I suspect have a disreputable past such as meth, etc that you as the proud new owners would be responsible for cleaning up.
A particular strategy that seems to have emerged here is for owners of older homes in poor shape that fail to sell for a year or more, to equity-strip with second (or greater) mortgages and then stop paying altogether - e.g. they just "sold" their home to the bank via foreclosure at remarkably close to the price they couldn't sell to a private party at. The bank(s) of course only did a drive-by appraisal (or perhaps just used a computer model) on these various secondary financings and hence will never get their money back in the foreclosure auction. Many of these homes are ultimately sold for the land value minus demo costs.
I wouldn't touch most of these "deals".
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