Whether it is better for you to buy at auction or after the auction depends on your personal goals and restrictions. The deepest discounts and the best bargains usually go to buyers who bid at the auctions. Those buyers also have the greatest risks of the following things.
1. The foreclosure was defective in some manner and the borrower will be able to set it aside.
2. The buyer overlooked one or more title defects, did not purchase title insurance, and someone else can take the property away from the purchaser without paying any money.
3. In some states, the former owner might be able to exercise his or her right to buy the property back from the successful bidder, resulting in the bidder being unable to resell the property for some time period.
4. The former owner can file for bankruptcy and undo the foreclosure sale.
These risks are all manageable, but they can add significantly to your stress level. Risks 1 and 4 can be managed with a buy-back agreement between the buyer and the lender, in the event the foreclosure is contested or set aside in bankruptcy. Good title insurance will take care of Risk 2. As long as you know the redemptory rights in your state, Risk 3 might not exist at all, or you might just have to factor a holding period into your flipping plans.
Buying after the foreclosure auction usually means you must wait some period of time during which the property can be sold only for its appraised value. This might be due to internal lender requirements or government regulations in the event of a U.S. Department of Housing and Urban Development (HUD) foreclosure. During that time period, real estate agents will successfully sell some of the properties. That means the pool of available deals will be smaller. You will have fewer choices, but they should be safer ones than those up for bidding at foreclosure.