I don't know your specific market, but your homes should be priced more affordably than these foreclosures and I would not give this much weight. Your test ad will tell the real demand story for housing.
I would never want to buy a 60K trashed foreclosure needing 40K of repairs when I can get a brand new home for 40K in your Park. What are the new or remodeled homes going for in the area? I think that's a better comparison, and it typically separates the competition even further.