I have an eye at locating the REO properties and have found a few over the last few years in my neighborhood.

The neighborhood, size of the unit, and garage will sell the property.  

Is it a good neighborhood or a bad one?

You’ve checked out the Indianapolis ‘Investors guide to grading INDY neighborhoods’ no doubt...  

Going through the same houses in the same neighborhoods.

Single family home in need of some TLC for sale in western PA for $39,900.Median house price in the neighborhood $75-80kAverage rent for a similar property in that zip code $850-$900I would be putting down 20%, 5% interest, 30 years.Allocating $15k for rehabTotal cash needed $24,177Rent: $900/moVacancy: 5% ($45)Taxes: $238/moHome Insurance: $38/moMaintenance: 8% ($72)Capital Expenditures: 8% ($72)Utilities/Landscaping paid by tenant. 

As long as you do your due diligence on the neighborhood you finally decide to invest in you shall do fine.

If you want to challenge the appraisal you will need a comparable sale of a similar property in your neighborhood. 

The renal rate is what I'm the most uncertain about. 3 bedrooms are going for between $1,100 & $1,300   there are not a ton of 4 bedrooms in this neighborhood that I have seen the asking rent so the $1,500 is based on the more general area.

The agent value comes in analyzing the value, neighborhood trend/knowledge, how to read/research the seller as to motivation, protective and trap clauses in the wording of the contract, which lenders actually perform, which title companies to avoid, which inspectors to use/avoid, how to negotiate when problems occur prior to closing, etc, etc.....all of which You you are not experienced/competent in.So, You decide.