It depends on where and when you buy the foreclosed home. Here are the possible ways:
1. In San Jose, buying at the market street outside of the court house on the side walk street.
You pay only cashier's check in full. I won'd recommend you buying a foreclosed home this way unless you want to swim with the sharks in the same pool. This is a real game and don't play it unless you are very savy and know the market even better than a Real Estate agent!
2. Buying at auction: If homes do not sell at "Market Street" they become REO, Real Estate owned by banks. In this case, bank will eventualy list the property on MLS through a Real Estate agent. from time to time, banks want to clear their inventory and they would place some of those REO properties on auction. This does not necessarily mean that you are buying the property at a bargain price. You could however come across some good deals. You just have to make sure that you have studied the market closly and do not fall into the bidding war at the auction. When buying at auction you have to consider the auctioneer's fees as well. Some of the bigest auction companies that I have been to charge about 10% of the winning bid on top of the price. Which means if you are bidding you must take that 10% into consideration also. You do not have to pay cash when buying at an auction. You can either go through your own financing lender or sit with one of the lenders at the auction and get your approval and sign up for the application. If you buy through this option, it is a good idea to use services of a Real Estate agent, since they could provide you with full service on coordinating the transaction and evaluating the market for your prior to your purchase and you are not paying them directly. They will get paid through part of that 10% that you have to pay the auctioneer regardless of using their service or not.
3. Buying REO (Bank owned - post foreclosure) listed on MLS. this is just like buying any other property on MLS. The response time normaly in REO properties is faster than short sale properties and more effective. If your agent knows the market well, and knows how to package your offer, you could get some real good deals out of these properties.
I have been involved in buying and selling 5 bank owned properties in the last 6 weeks and just closed o on a property that was sold through auction three months ago, and have pretty good information on dealing with these type of properties.
No matter which approach you take, review all your options in detail.