i know this is difficult, but your best bet is to find a motivated seller. his motivation may vary: divorce, bankruptcy, foreclosure, wants to sell before foreclosure (he knows he can't make his monthly nut anymore), etc.
how do you find someone like this? get out there. follow any and all leads. the amount of work you do will equal the amount of discount you can get off of fair market value. we bought our house from a third party (receivership, i think they call it - they had been renting to us for over a year). by making an offer $20,000 below what the third party was asking, we ended up in a slight fixer-upper (i had already done so much to make it easier for us to live in: spackle and paint, new sinks and faucets, etc. - all small stuff) that had a fair market value of $90,000 for $73,000. we walked away with a house that had a new hot water heater and furnace, new vinyl siding for almost $30k below FMV (we put the roof on five years later for $3000). financing was no problem because of my wife's stellar credit although we did bite it on the interest rate. when we refi'd two years later we dropped 6 points.
cliff's notes: find a motivated seller. you can walk away with a steal.