If you're shopping for a foreclosed house that you want to flip, lie down until the urge passes. Your checkbook and credit report will thank you. But if you're looking for a home to live in, buying a foreclosure might save you some money. Foreclosed homes typically cost 10% to 15% less than comparable homes in the same neighborhood, even after you've made all the needed repairs. Savings of 20% or more are not unheard of. Don't buy at an auction. In today's housing market, even experienced auction buyers are getting burned because so many foreclosures are in awful condition. When you buy at an auction, especially the ones they're holding at your local city hall or courthouse -- right on the steps, weather permitting -- you usually aren't allowed to look inside before you bid. That means it's impossible to know what shape the home is in until you get the keys. At that point, the house and all of the unexpected costs are yours. So here's the one, inviolate rule of buying a foreclosure: Don't commit to a home you haven't thoroughly inspected, inside and out. Buy through a real estate agent. In many foreclosure auctions, no one bids, or no one bids enough to cover the outstanding mortgage. When that happens, the lender obtains title to the home and becomes responsible for selling it. Those banks or mortgage companies usually hire a real estate agent specially trained to sell what are called real-estate owned, or REO, properties. Before those homes are put on the market, the lender usually repairs the worst of the damage. You're also allowed to tour the home so you can see exactly what you're buying before making an offer. This also allows you to sign with a similar, REO-qualified agent to represent you, much as you would contract with an agent to buy a non-foreclosed home. (Agents handling REO sales are paid a commission from the sale, just as with a normal transaction.)