When you camp outside Best Buy the overnight before Black Friday with the hope of getting a couple hundred discount on an iPad, you have to weigh the risks and opportunity cost of your time vs. the potential discount. The same goes for buying a property at trustee sale on the courthouse steps. You need to take into account your risk and your time in trying to get a potential good deal that might not end up a good deal.
A recent home in a good school district didn't show up in traditional real estate searches because it was not put on the traditional market and instead bought at the riskiest phase of the foreclosure process, the auction at the courthouse steps. When you buy real estate at auction, you don't have title insurance and you risk owing unknown liens (IRS, etc.) on the property. Also, you have to bid higher than what the bank thinks it is worth to get it. The bank won't let you get it at a bargain. If they think your bid would be too good of a deal, they outbid you and take over that property for themselves.
Here are the risks when buying at the courthouse steps:
Homes aren't guaranteed to have a clear title
--The house might have liens
--IRS tax debt owed to the US government
--Property tax owed to the county government
--No title insurance to protect you and make sure the title is clear
--Without the legal proceeding of foreclosure, all subordinate liens remain
Inside condition of the house not guaranteed
--No guarantee the current occupant will move out peacefully
--Might need to negotiate to get occupant out
Here's the time you have to invest:
--Need to do a huge amount of research and due diligence
--You won't be protected if you miss something.
--Have to go to the county courthouse typically a weekday morning.
--Takes time from your other money-making endeavors, such as your JOB :-)
--Bidders must go to the trustee sale flush with CASH.
--You must make a sizable deposit or pay the entire sum on the spot.
Even after buying, the flipper has much work to do:
--Need to fix/repair/renovate. Costs time and money.
--The selling time may not be as quick as hoped.
--The property could sit on the market.
It's safer and better to buy the properties in the REO phase because then you'll have title insurance to protect you from liens on the property.