Great answer, Perry-- When properties go to auction, I'm not seeing the 'bargain prices' there versus people picking up homes in short sale/pre-foreclosure or REO. There are too many people at the auctions throwing in bids and raising that price. Auctions aren't all that 'special' for "good deals".
Angry "ex" homeowners are not uncommon. Angry tenants are not uncommon either. I've seen things like cement mix put down drains, wiring cut/hacked up, a wall with a hole punched in and filled with cat feces, stashes of dirty diapers hidden in backs of cabinets... I could go on and on.
Now, as a question of Karma... Think of it this way. If that home sat there, unoccupied, what would happen? The bank isn't going to send housekeepers and landscapers to maintain it. That vacant home is a TARGET for crime. There are valuable appliances, fixtures, copper tubing.... all kinds of things in there that a thief could come in and steal. Squatters/vagrants/drug dealers may take up business in that vacant house. Windows are broken, landscaping gets worse and worse, fixtures are ripped off... and then what happens? Would YOU want to buy/own a house that was next door to a dump? That vacant home that turns into a neighborhood blight--- a blight that increased your crime risk in your neighborhood. It is decreasing that whole neighborhood's property values FAST. When I go to preview or show properties that have been vacant for very long periods of time, I am always very weary... You never know what to expect.
So, no. I don't think buying a foreclosed home is bad karma. I think of it as a positive thing--- you are helping the community out by doing something with that house.