Not true! The seller can notify the lender that there is a buyer interested in the property who wants to make an offer. The lender would then postpone the auction. The offer will pretty much have to follow the guidelines of a short sale, ie proof of funds, etc. If the offer is for less than the loan amount, the bank will have to approve it, and in most cases, if it is for less the chances of the sale occuring at this point are not good. 70% of short sales never close. Also, buying property at auction is the least desirable option with the most risk to the buyer. You would be better off waiting until the lender returns the property to market as an REO, having cleared the title, any liens and making the property compliant with local zoning laws.