Not always, but you would be very dumb to not scout these out first before buying a resale or new construction. There are simply too many to ignore and they are in all price ranges and locations, including new construction. Many builders have been foreclosed because they could not sell the new homes. I couldn't even tell you a sub that did not have at least one distressed property available. Banks, HUD, Fannie Mae and Freddie Mac are all discounting these home to move them so you stand a very good chance of getting a very good deal. Isn't that what everyone wants when they buy a home? I think so. You may have to look past some defects, wallpaper, repairs, etc to get into a bargain. To many people, this is difficult to do. They want their new home to look and feel "new" when they move in. Distressed homes must be bought "warts and all". But a little elbow grease and fix-ups can make it yours and you will have instant equity, which is not a bad thing when we are not sure how much more, or if, prices will fall. Open your mind and look past the problems and you will have a good chance of winning. Good luck!!