The buyer behavior described by the OP does not seem surprising at all. 

@Arthur LeaoThe Roth IRA likely does not factor into your strategy as you have described it.The Roth IRA is not sufficient to purchase a property outright or with a non-recourse loan.The Roth IRA cannot be combined with personal funds to create a deal, since it is not sufficient to do a deal on it's own.It sounds as if you want access to the income.While an IRA may invest in real property, doing so is a way to diversify the IRA savings, not a way to bring that IRA money into your real estate deals.

Here is my post describing that deal if you're interested: https://www.biggerpockets.com/forums/41/topics/345447-help-analyzing-my-first-foreclosureOnce the rehab has begun there and I have all my ducks in a row, I plan to begin some direct marketing around Clark Co. and Louisville to find motivated sellers.

I read another post from a BP member from 2 years ago and he described the whole Harris county auction process and he said the same thing that it was really a mad house, everyone crammed in real tight, auctioneers not speaking loud enough and maybe didnt know what they were doing, people (maybe newbies) bidding up the price to or above retail....just madness.But it is something I'd like to see and more important meet some of the investors, people who are actually buying properties and doing it.I might hook up with the group you were talking about, my only concern is them taking away time from seeing the action and meeting the players, but it might be wise for a first timer to go with someone who can show me the ropes once inside .Bad thing for them is, thanks to BP there really isnt any way i could see myself coughing up any money for information that i can get here for free.

In this post I'm going to describe my experience in using smart move and try to call out where I see benefits and drawbacks to the service.

@Anthony Ciulla What you describe (further developing a property with additional units if zoned correctly) is very doable - that's mostly what we've been doing in SD for the past 5 years.Be very careful, though - the costs associated with doing it are far, far greater than most people expect.  

how is it described on the tax account ?    

But I do know local managers that rip off out of state investors and such even tried on me but difference is im here locally and handle my own maintenance and such so harder to get away with overcharging me and such. let me make this very clear I do not offer turn key properties or practice unfair business practices as you seem to almost be implying but like described I do see happening nd this is why I question this cause I would like offer quality honesty and integrity where it is lacking .

Regarding "tax sale flipping," I think the mechanics of what you are describing would work, but I don't understand why an investor would buy the tax deed from you at a markup instead of buying it directly at the auction.  

I'm actually a managing broker myself so I do know how dual agency works (it varies from state to state and is different than you described in IL).