Rachel: Buying foreclosures is a work for investors and pros, not for people looking for a home, unless they are well equipped to handle the adversity of the situation. These sales are called, "distressed" for a reason!
There are three venues where foreclosed homes are sold and two types of foreclosure.
First, and most typically, there is the Sheriff's sale in behalf of a lender who has not been paid. While the successful bidder does not have to pay for the amount of the loan not covered by the bid, the lender will not usually let a third party take the property for less than the amount owed, since they have little hope of getting the balance not covered from the former owner. Any back taxes go with the property and must be paid by the new owner. There is no forgiveness there.
Second, there is the sale just for back taxes. This is complicated because only the taxes owed for the period are sold and the property owner has a long period to redeem the property by paying a very substantial interest to the successful bidder (who is in essence, a lender to the owner, having paid his taxes for him) but usually on an amount far below the value of the property. This can take years to complete before the tax lien results in an investor owning the property, all the while continued deterioration of the property is usually progressing.
Finally there is the post foreclosure sale. There are three ways to buy a property from whoever owns it after the foreclosure process. First, you might figure out who that entity is, and if it's a mortgage company, they MIGHT take a direct offer from you. I sold one this way by approaching the owner for a buyer client some years ago.
The more normal route is that the new owner puts the property on the market through a Realtor and it gets listed in an MLS. Depending on the astuteness of the Realtor and the owner, the price may be reasonable or may not. I took over a property that had been listed for six months at too high a price of $79,000 and relisted it at $29,000. It had great activity and sold close to the asking price. It had, in my estimate, $50,000 in repairs! The lesson here is that the purchaser must be very diligent in doing their homework. Buying that property with that amount of repairs at $79,000 would NOT have resulted in a good deal in today's market.
The last way that foreclosures are sold is though periodic public auctions. Usually these are properties in poor condition where the new owner feels that the costs of selling through a Realtor are more than the expected revenue will cover. I have purchased a property through one of these auctions for a client but do not regularly keep up with when and where the next auction will take place, not having a regular client interested in having me represent them for a fee.
I hope this fully covers your question and further urge you to find a Realtor who will work with you to find good deals in the regular MLS market, which is truly the best place for the average home seeker to go.