The Best Places to Buy Foreclosed Homes

Then, we looked at how real estate prices have moved since 2006, based on data from Moody's Economy.com. No city has seen massive median price jumps, but making a foreclosure buy in San Antonio, where prices grew 8.24% between 2006 and 2007, carries far less risk than Sacramento, where prices dropped approximately 10% over that same time period.

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Next, we looked at the spread between median prices and foreclosure prices, with data supplied by RealtyTrac, to determine where banks and sellers were offering the largest discounts on foreclosed properties. Stubborn sellers looking for full value aren't as helpful to a bargain hunter as sellers willing to make a short sale--where the home is sold for under the outstanding loan value--in order to unload a property quickly.

By this measure, Charlotte, N.C., performs very well. Foreclosure prices are 28% below median prices, for an average savings of $56,874. Not bad in a market where the median sales price is $147,299.

Foreclosures and real-estate-owned properties are available through local listing agents, though the most comprehensive databases are found in the online depositories of companies like RealtyTrac.