Should I look into an REO first?

[Patrick H.]

I was going to stop by a few banks to get pre-qualified (or at least see what I qualify for) and talk to them about any homes they are selling.

Since REO's have potential unknown liability issues, is it more likely a "you get what you pay for" situation.

A home may have a price of $250k, but have an estimated value of $300k (based on size, age, neigborhood, etc), but that means the bank estimates there is $50k worth of liability (whether that is unknown debt or repairs).