Auctioned properties are a whole world of their own. Many auctions happen as a result of foreclosures. For details on those auctions (which are commonly held on the courthouse steps) you should read this FAQ.
However, other auctions can be held by private auction companies. There are a few things you should know before bidding on an auctioned property, specifically:
You have a limited amount of time to inspect a property:Usually there is a window of time for inspections. The properties are almost always sold in "as-is" condition. You may not have the time to perform a full inspection, but you may have to do more of a "visual inspection".
You have to register before you can bid:Registering usually requires you to put down a cash deposit of between $5k and $100k before you place a bit. You may also have to prove you have access to the funds up to the amount you wish to bid, before bidding begins.
Most banks will not loan you money to buy an auctioned property:Almost all banks require certain conditions for them to feel comfortable loaning you money on a property, because they want to make sure they will be able to resell property if you don't pay your mortgage. An auction does not give them the security they need, in terms of inspections, appraisals, etc., to ensure the property is worth the price you've paid for it. Therefore, banks will almost never loan you money for an auction, so you'll have to find money from other sources.
Because of all of these issues, we do not recommend auctions to our clients unless they are willing to spend the time to educate themselves on the process. For most buyers, the auction process is too fraught with risk to make the benefits worthwhile.