When you hire a real estate agent to sell your house, one of the first things the agent will do is to create a Certified Market Analysis (CMA), which analyzes the sale prices of similar properties in your neighborhood. This is an important step in determining the starting sale price of your home. Because foreclosures obviously sell for less, they bring down the average sale price for the neighborhood.
When you review the agent's assessment, make sure the list of recently sold homes includes foreclosures. Like it or not, the prices of every house in a neighborhood can be influenced by even just one foreclosure, and an honest assessment will include this information.