You have to distinguish between homes that the banks already own and properties that are still owned by the borrower, but a notice of default has already been entered. The foreclosure procedures vary from state to state and I can only speak for California. The foreclosure process begins with recording a notice of default and then if the borrower does not cure the default within the prescribed time, the bank will publish a notice of trustee sale (the auction). If the borrower can't come up with the money to pay what's owed, the property is put up for sale through auction on the day specified in the publication notice. If nobody meets the minimum bid at the trustee sale (usually outside the county court house), the property goes back to the bank. Once the bank owns the property, the bank will typically list the property with a local realtor to sell the property through the MLS. Only if the property does not sell through the MLS, will the bank turn it over to an auctioneer. It's my understanding that banks do not sell directly to buyers.
Many borrowers who are in default or who owe more than the house is worth, will try to sell the property before the auction day through what's called a "short sale." Essentially, when someone is trying to shortsell, they are asking the bank to take less than what's owed. Buyers who wish to buy a shortsale property have to expect to be very patient as banks typically do not respond very quickly to shortsale requests. They respond a lot faster to offers once they own the property. Bank owned properties are known as REOs (which stands for Real Estate Owned).