Hello T, and thanks for your question.
The other real estate professions on this site have provided you with extremely good information. So here's one question for you to ponder...
Can you afford to purchase a second home and pay for two mortgages?
If the answer to this question is "no," then you would be better off selling your current home first and then attending an auction to purchase the second home.
Although the private auction companies do have lenders on site who can assist you in the purchase of the home, these lenders (like all lenders) will require the purchaser to have adequate capital to complete the sale and enough income (and lower debt) to qualify and pay for the monthly mortgage payment. If you cannot pay for or qualify for the purchase of a second home now, it is unlikely that you will be able to complete a transaction at a private auction.
Trustee's Sales, which are held as the final step in a foreclosure, are a bit different from the private auction. In most cases, the "minimum bid" on a home is set by the outstanding loan and in today's market, often the cost of the loan exceeds the fair market value of the property. As a result, most of the homes sold at a Trustee's Sale reverts back to the lien holder--the mortgage company. There are no lenders at a Trustee's Sale and you will be required to present "cash" (or a cash equivalent, such as a certified check) to the County representative at the close of the auction. If you are truly interested in purchasing foreclosure property, there are several websites that you can subscribe to (all require a fee) that will keep you updated on foreclosures in your area.
Good luck and happy house hunting!
Grace Morioka, SRES, e-Pro
Area Pro Realty