I attended a few "courthouse steps" foreclosure auctions a couple years ago, hoping (like you) for a sweet deal. I was deeply disappointed in the process each time. Basically, it seems like the banks are required to offer the houses at auction - but they're also allowed to set the minimum bid so high that effectively they eliminate any chance it will actually sell. In essence, the bank ends up buying the properties at those inflated values themselves (and since they're paying themselves, they have no incentive to actually lower the price). Then they put them right on the market starting at those ridiculous prices, eventually (over 6-12 months) ratcheting the price down until they're actually worth buying.
On the other hand, I have NOT attended any tax auctions, where banks are not involved. Those are probably much better for finding good deals. But I've read there are some hidden costs and possibilities to be hit with unforeseen fees and payments and penalties.
In either case, be aware you're going up against a raft of hard-core investors with plenty of cash and a keen eye for real value. At each auction, there were several "regulars" ready to pounce on any good deal. There's a solid market for such properties right now, and the pros are ready, willing, and able to grab them. Forget whatever you see on "Flip or Flop" - the reality is nothing like those shows.
