There are a few ways to purchase a distressed property.
1. During the foreclosure process (after bank has filed the lis pendes), contact the home owner to see if they will agree to do a short sale.
2. Buy it at the auction. Be careful here. Not only do you have to bring 10% of purchase price that day, but pay the remaining balance within 24 hours or loose your down payment. Also, you will be competing with seasoned investors who will drive up the price on you if they smell inexperience. Also, you will not have the opportunity to inspect the property beforehand.
3. After the bank takes it back, but before it is listed with a realtor, it becomes "shadow inventory." You might be able to track down the asset manager and make an offer.
4. Find a solid realtor (like myself) ;) and let me hunt down the great opportunities for you!