Nearly everyone is interested in foreclosures, because they think they are the best deals. For some reason you rarely hear about the horror stories in buying a foreclosure. Think about this for a second... when is the last time you heard about crime and the Las Vegas Strip? You don't hear about it... so that means it never happens, right? Or is there big money keeping the lid on stories that might hurt their industry?  

We've seen banks know about big problems and not disclose them. We no longer represent banks because what you are asked to do in some cases just isn't right. It might not be in writing but does that mean it doesn't happen? Let's say you cancel a deal with a bank because you found the pipes were bad in a few spots. Shouldn't that show up in the MLS when it goes back on the market? You always hear about when the buyer's financing fell through, but not that the financing fell through because the buyer's lender won't finance a house with broken pipes.

You have every right to still have a home inspection done, but you have no definitive history on the house outside of permits pulled, and the bank makes you sign off on things releasing them of any liabilities. You can talk to neighbors, but that's not always accurate either. Your best chance at getting legitimate history is to find a recent listing of the home before it was foreclosed on and see if it has a property disclosure attached.

Ultimately, foreclosures can be great deals, but you won't know until you officially own the house.