I don't think "picked over" is accurate. You can only pick over what's in front of you, and not the pre-forclosures and all the other homes in the pipeline. It's not a static thing - like a pile of homes - it's an ever-refreshing wave of new foreclosures coming on to the market. That being said, everyone knows we are at or near bottom and cash buyers - because of stock market profits - are everywhere.
I can tell you that there is a large group of investors that have a direct pipeline on this shadow inventory and will get the investment grade inventory before the general public sees them. That is why in the recovering markets, the general public have gone to regular new listings.
There is another scam that I have come across. Property owners are allowing their properties to go into auction to settle tax liens. In these auctions, the winning bidder has to wait 10 days before the property closes. During this time, a bidder can place a higher bid and a new 10 day waiting period starts. Or the property owner can come, pay the back taxes and the sale is canceled.
So what happens is the property owner allows their property to go into county auction. A partner of the owner bids on the property but allows the winning bid to go to another party. On the 9th day, the owner's partner places another bid causing the original bid winner to increase the bid again which starts another 10 waiting period. The owner's partner then calls the winning bidder and offers them not to put in a new bid if they pay them $10,000. If the winning bidder pays them the money, the owner goes into the tax office and pays off their tax lien using part of the $10,000. Or if the winning bidder does not pay the $10,000, the property owner just goes in and pays the tax lien.
There are a lot of these types of scams going on and are reflected in the shadow inventory numbers. Basically they are playing on all those that think they can get these great deals. The only way these special deals can exist is that they are difficult to find and they can prey on people desperate to close on one.
Of course, all areas are different. You should try to find a good foreclosure in your area. I have tried where I live and have come empty. That is why I a building new and that is why builders will profit in the near future.