You may find it a much better deal to wait until it's REO. Once the bank owns it, they usually want to unload. Someone in my office who put a foreclosure on the market two weeks ago on a Thursday had 10 offers by Monday morning. It is selling for over asking and all cash. The reason people don't want them at auction is the bank is bidding to cover what they are owed in most instances and many times the house isn't worth it. I speak not just from more then 15 years as a Realtor, but I'm sitting here replying from my own foreclosure that I bought for less from the bank then I would have had to bid at the court house.
Foreclosures can be a good deal at the court house steps, and they can be a much bigger nightmare. Don't expect to do ANY kind of inspections buying at the court. That not only means you won't be able to do a general home inspection, but it would be very unusual for you to be able to inspect septic, well and underground oil tank(S). You bid, you own it.
One a house gets listed with a Realtor the house is usually priced at a discounted market price taking into account the house probably needs work. You can usually get a good price if you have a decent idea of what you are doing and have a good agent as guidance.
When buying a foreclosure keep in mind three things, location, location, location. It holds just as true with foreclosures as it does with every other part of real estate. You buy a house for a good price in a dumpy neighborhood and when you fix it up, it's still in a dumpy neighborhood.
Don't be discouraged. You can still get a great deal with foreclosures. Don't buy anything just to buy something, but if a really good deal comes along you have to be ready to make a move immediately and can't be shy if multiple bids come in to bid over asking price. If I can be of any more help, don't be afraid to ask.
Licensed Associate Broker
Prudential Serls Prime Properties