Buying a foreclosure is similar in that it's transferring ownership of a property from one owner to another. The fact that the seller is a bank who is trying to recover their investment makes this a very different and challenging process.
Please be very careful with foreclosures! Often times they sound like a great deal - the buyer gets lots of house for a very little amount of money.
But make sure that you understand what you're getting yourself into. Banks put themselves in a "first lean" position which gives them first dibs on repossessing the property, but there are usually other parties that also have leans that need to be satisfied such as a second mortgage lender, a public utility, a contractor, etc. Just because the price of the property is low, doesn't mean that there won't be THOUSANDS of dollars in leans that must be paid - not to mention attorneys fees!
Second, there are sort-of three separate ways of attaching a value to a property - one of them is sale price, which is typically market driven. Another way of looking at the value of a property is "replacement cost", simply what it would cost to completely rebuild the home as it currently stands. And the third valuation of a property is the "assessed value", which is what is used for tax purposes. Just because you are able to buy a foreclosure for a great price, you will still pay Real Estate taxes based on the assessed value of the home, and you will still owe your insurance company based on the replacement value of the home.
Third, there are lots of other little strings attached, for example the buyer is often times expected to pay the entire transfer tax (typically the buyer and seller split this fee 50/50). So make sure that you understand your entire "cost to close".
So to recap:
-Make sure you understand ALL of the costs that you're expected to pay in order to own the property outright.
-Don't buy a house that you wouldn't otherwise be able to afford, because once you own it your operating costs (taxes, utilities, insurance, etc) will be based on what the "real" price of the house is, not your heavily discounted wholesale price for the house.
-Understand ALL of the associated fees and costs to close.