Hilary, did you notice how all of the answers to your question were provided by realtors....... And they all discouraged you from buying it from the auction. Instead they're recommending that you purchase through one of them. Interesting.
I'm a real estate investor and I've purchased homes at these auctions. I've walked away from 10x as many as I've purchased. But the ones I've purchased have been 30-40% below market value. The trick is trying to determine what that market value actually is. The process certainly requires plenty of due diligence. Former owners may punch holes in the sheetrock, rip out the appliances. Most certainly suffer from general neglect.
I also find it interesting that the agents are all railing against the auction houses for charging a 5% fee.....that's typically at least how much a seller is going to pay to have their house sale consummated. Oh, and even though the realtors tell you that the sellers are paying for that service....its not true. Approx 75% of the commissions are passed on through to the buyer through a higher selling price, based on empirical studies.
Anyway, I'm a year and a half late on this comment, but posting for the benefit of others as well.
Best of luck.