Help! The house I love is going to auction tomorrow!

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Hi there,
One of my absolute favorite houses in my neighborhood is being foreclosed on, and the auction is tomorrow morning. Can you suggest anything that would help me 1) get the house at auction or 2) get it before it becomes an REO?

Here's our situation:
My husband and I have been looking for our first house in this expensive market. We're preapproved for financing, but don't have a lot of cash (we're planning on spending about $700-800k with 5% down).
According to Realty Trac, the house we love has an "opening bid" of $487k, the owners are $15k behind.
The house's value on the open market is between $1.2-$1.5M - which we could never afford, obviously. Is there anyway to offer to buy the house for our max of $800 or $850k? Would I contact the owner? The trustee?
Would it be worth going to the auction to make contact with whoever bids on the house?
Is there anyway that I could bid on the house without having $500k cash?

Incidentally, the one house we've made an offer on so far was an REO house (not intentionally - it was being marketed by an agent on the MLS, etc). It had been foreclosed on for $689 - nobody bid on it, apparently - was then listed for $812k, and we were outbid after offering $795k! Guess the lender earned a profit there!

Thanks for your help - I'm probably dreaming but I welcome your suggestions and insight.