We had tremendous success purchasing a foreclosure. It was in pretty good shape when we acquired it. We repainted it and took the old moldy carpet up. We bought it for a cottage, and it worked out pretty well for us.
Then we bought another one for a rental. It worked out great. It's our favorite unit.
Foreclosures present a tremendous opportunity to get your home at a discount. Sure, it will not have stainless steel appliances or granite counter tops (at least usually it won't), but you have got plenty of money for things left over
And if you want it for quick resale, here are some thoughts: