As more investors vie for fewer foreclosed properties, prices are going up and great deals are getting scarce.

Buyers of bank-owned homes in September got a 7.7 percent discount versus the same home in a non-distressed sale, according to a new analysis by Zillow, an online real estate sales and information company. The discount fell from 9.1 percent a year ago and from a peak of 23.7 percent in August of 2009*.

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