There are 2 basic ways, at an auction or through an agent when it's been listed. Depending on what you are trying to accomplish either may work for you.
As others have said, at an auction you'll need either full cash or a lender with a hard money loan and 20% down. There are services that assist buyer's at auctions, but you need your own expert to verify their opinions as to the real market value, especially if you intend to resell soon after buying.
If you are looking for a personal residence, forget about foreclosures pr short sales and focus on where you want to live and what you need in a house first. If you find a good home that was foreclosed or is a short sale be prepared for what that may mean.
If you are looking as an investor, are you intending to flip or purchase cash flow properties? This will affect how you value them and what and where you want to purchase.
You got some good answers already & I think they have made the point to you already. I would suggest, that as a buyer, you Google every agent that responds to your question here on Trulia, learn as much as you can about who they are online, read their client testimonials, so you know what their clients are saying about them, and then give us each a call and just ask us why we think you should work with us instead of another agent. This will take you a little while to do, but will be time well spent, as choosing the right agent is the first step towards choosing the right home. Then, pick the best fit for you and let them go to work for you with the skill and knowledge that they have. I hope to hear from you soon.
I know of one situation where a foreclosure buyer (at trustee sale) paid about 25-30% for than a nearly identical adjacent REO.
If you are searching from San Fran, then the best option for you at this point will be to research online while partnering with an agent who is a certified REO agent, like myself. We work with buyers both local and out of the area and have a great website set up to help you identify the BEST DEALS in the area. I am also a HUD broker and can assist with HUD owned homes which are some of the best deals on the market today here in the Seattle area. I am providing a link for you to our website, but feel free to contact me at email@example.com and I will gladly set up an account to notify you of NEW bank owned properties as they come on the market -- so you are the first to know of the newest inventory on the market. Additionally, I list bank owned homes for many asset management companies and often have access to lists of homes that are considered shadow inventory and currently not listed on the market. For example, I have the most recent list of Freddie Mac (pre-list) inventory and will gladly share that with you when I am working for you as your agent -- Let me know if I have caught your interest. Have a great day!!
Much better to wait until it's listed. You then get some limited inspection rights, a clear path to title insurance and have better financing options.
The best way to purchase a foreclosure in Seattle wouold be to research the property you're interested in and show up at the foreclosure auction with certified funds in the form of a cashier's check (s), and then bid on the property.
Make sure you research the property. Repeat...research the property.