Sit down, because this may surprise you, but a bank owned fixer or stripped down short sale may not give you the best bang for your buck. Sometimes it's wiser to swim against the current than drift along with the crowd. It's Warren Buffet's approach to mass mentality and it might work for you too.
The bank owned property is usually priced close to market value or just below in my area. That's enticing, but this is where it pays to read the fine print. The bank will make no repairs including termite work, and that can cost thousands of dollars if fumigation and extensive repairs are needed. If you want a home warranty to cover appliances and home systems the first year, be prepared to write a check to cover the cost because the seller will ignore your request for this little perk. 
If a short sale sounds appealing be prepared to bid over the asking price and muster up the patience of Job. Your offer may be one of many on an artificially underpriced property, and if selected as the one offer that is submitted to the bank you will most likely be required to wait weeks for the bank to accept or decline your offer. If you enjoy a bidding war free-for-all then by all means throw an offer in the pile. Don't expect the owner/seller to make needed repairs--he's broke. A short sale is only approved by the lender if the owner demonstrates financial hardship. Trust me, there's no money for deferred maintenance or cosmetic beautification. That will come from the buyer's bank account.
On the other hand, there are a few sleeper properties on every MLS. They don't have all the latest bells and whistles, they are often short on improvements, but well maintained by long term owners. The bank is not nipping at their heels, but the retirement home beckons. A Palos Verdes property I showed last week comes to mind. It has a great view, lots of space and a prime location. It also has a 1960s kitchen, similar bathrooms but nothing a little nip/tuck could not fix. It's important to buy the amenities you can not add later: location, view and land.
Sometimes the asking price is just the beginning of what the property will cost you.
Norma Toering & Team RE/MAX Palos Verdes Realty
(310) 493-8333 / Office Phone: (310) 831-0800
PalosVerdesLifestyle - Nominated by Relocation.com as one of the top ten Los Angeles area real estate blogs. Ranked by Technorati in the top 1% of all blogs. As seen in the Daily Breeze newspaper.
South Bay Los Angeles cities I sell real estate, property, houses and homes in: Palos Verdes Estates, Rolling Hills, Rolling Hills Estates, Rancho Palos Verdes, San Pedro, Long Beach, Torrance, Lomita, Redondo Beach, Hermosa Beach and Manhattan Beach. Information is deemed reliable but not guaranteed.
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Norma,
Excellent points. Look at the overall expenses, not just the purchase expenses. And if you're waiting for a short-sale to be approved, hope and pray the rules of the financing game haven't changed by the time you can close.
If you have approval today, then buy today, tomorrow is anybody's guess when it comes to the governmental stupidity that is being inflicked on the markets.
Location. location, location still works for many. They buy low there and improve it.
Featured @ Club Chaos
Mike - Yes, make sure you know the true cost of the deal you're getting is good advice.
Jim - We're in agreement on the importance of location.
C Tann-Starr - I'm honored by the feature. Thank you!
Tag your it! Read one of your comments on another post and thought I'd pop by and say hi! :-) Loved the article..........pearls of wisdom for sure!