There is a tendency in the market these days for sellers to get down about having to compete in a market that has so many foreclosed properties. They are, after all, normally priced well below what a house that is not foreclosed might be priced at, for comparable size and features. So, how does one compete, if your price is $40-50-100K more than the foreclosed house next door? Remember the 3-C's of real estate - condition, clutter and cleanliness - that's how.
Most foreclosed homes that I've been in lately are a mess inside and out. Most have been neglected for quite some time and some have been trashed by the prior owners or vandalized after they were abandoned. So a buyer going into one of these places starts off with this low, low price in mind; but, by the time they get through making their mental lists of things that need to be done, in some cases just to make the place habitable, that low price won't look quite as attractive. Your edge, if you're looking for one is that you can present a "move-in-ready" house to the market. Just make sure that your house doesn't also generate a long list of to-do's when people visit it. See my earlier posts on the 3-Cs's and on giving your home a mini-makeover for some tips on making that happen.
If you're a seller or thinking of selling, just remember that a well maintained and presented house will eventually attract buyers. You still need to be competitively priced, but only against other, non-foreclosure houses.