Many, and in some areas most, of these houses will need to either be completely gutted or demolished. This is especially true in areas of high humidity and even more true when the banks didn't have the houses completely cleaned after the foreclosure.
Yes true. If these house were properly administered and brought to market in a responsible manor the distortion in the RE markets would be lessened. There are some of us paying elevated property taxes on higher assessments then would otherwise with less market distortion.