There are several sources for finding foreclosure homes. But to be more accurate, the foreclosure homes are the ones that are actually at the auction. Those auction notices are published daily in your local newspapers.

Finding the properties before they go to auction, while in pre-foreclosure, you will probably want to talk to your local Real Estate Investment Association (or club). They are probably already tracking most of the Notice of Defaults already but can show you where to look yourself. Usually a title/escrow company will email that list weekly. You can also check with you local county land records (usually online) daily.

After the foreclosure sale you will be looking for bank REOs (Real Estate Owned). These are usually on the market 2-6 months after the auction. They have to get appraisals or BPO’s (Broker Price Opinions) to estimate market value as well as other paperwork for the specific institution before they get listed and sold to the general public. These are found through a few local realtors who get the bulk of these listings and you can find them online through your local MLS, Realtor.com or most of your local agents will have some link to local housing information searches. (If you go this route I would recommend finding the main agents and contacting them directly…you’ll get faster information and less red tape since they make more commissions if you buy directly through them.)

Each stage of the process has it’s pros and cons…

Pre-foreclosurePros: You get a chance to work directly with the owner, the banks have some flexibility on price (for a short sale), great discounts on junior liens, more options and terms to negotiate.
Cons: Not all homeowners are willing to work with you (in a state of denial), not all lien holders feel the need to negotiate, usually need cash or access to quick money, usually requires educating the sellers.

Foreclosure (auctions)Pros: opening bid is usually at the amount of the first lein only, (right now) few bidders & lots of property, no negotiations.
Cons: requires cash, no guarantees (it only takes on idiot to bid up the price), no inspection period.

REOsPros: regular purchase process with loan qualifying time and inspection periods, full representation.
Cons: more competition from investors, less flexibility from banks, subject to rules of traditional lending.

Keep in mind that all three options have opportunities for fabulous deals. It’s up to you to pick an option that fits your style for investing.

Additional websites:
RealtyTrac.com
Foreclosure.com
ForeclosureFreeSearch.com
Foreclosure.net