Our agent told us there were deals to be had, but that if we wanted to buy a home in foreclosure, we had to be prepared to deal with a LOT of red tape, misc paperwork, extra hoops, etc. Plus it would take a lot longer than a conventional purchase. Plus since the good ones had already gone, many were in pretty tough shape. We didn't buy a repo.
Fast forward to today, and I think the prevailing logic is that people currently trying to sell are going to have to start competing with the perceived foreclosure prices. Agents and brokers will push all those notions, of course. It will take a bit of time to sort out. The thing is, pricedropping is only one half of the story. The other half is that the seller still holds the mortgage at the original price.
It's my understanding that the bad subprime loans have been sold so many times, it's kind of tough to even figure out who the mortgage holder *is* in some cases, which will add even more time to the process. (That is, if Steve Kroft's 60 Minutes reporting is to be believed, and I'm not saying that it is.)
Another major difference this time is the sheer number of these foreclosed homes. I'm talking about California, but, of course, this is happening all over.
Here's an article from today's SF Chronicle: Mortgage crisis is creating new 'slumburbs'
So I thought I'd throw my two cents in, from the practical man-on-the-street standpoint. In the long run, what you said is true, I think. There is a lot of back-and-forth in the process.