I"ve also heard of some instances where the banks try to limit the amount you can resell the property for.
When you buy at a foreclosure auction there is an amount the bank is bidding to protect their investment. Frequently you can buy a house for LESS then you would at the auction if you wait until the bank owns it. I bought a house for myself from a bank, paid $7k less than I would have at the auction and got the bank to pay for installation of a new fence around an inground pool and give me $3k credit towards a new boiler. I contacted the bank directly after the sale and as I was a broker, they sent me the keys to inspect the property. The bank was happy someone qualified wanted to purchase the house as they wouldn't have to pay a broker's commission and own the property for longer than they had to. I bought the house for $193k and sold it a few years ago when the market was down for $492k. Yes, they can be good deals if you know what you're looking at. They "can" be a great deal to buy at auction, but it depends on your risk tolerance.
Licensed Associate Broker
Douglas Elliman Real Estate