This article from the New York Times indicates that although properties in foreclosure are attractive due to the price, there may be other costs associated with them. These costs, in turn, can make the properties seem less attractive.
Since most properties are sold, "as is," a potential buyer may be taking on some serious problems. Some situations, like short sales, may seem simple, but hidden red tape makes them more complex. Since the seller's bank (and possible second and third lenders) must approve the sale price, the process can take a long time. Moreover, list prices may not accurately reflect what the final purchase price would be.
This doesn't mean that investing in a property that is being foreclosed is a bad idea. The article itself is a good read for anyone interested -- it outlines some possible pitfalls and stumbling blocks.
