I have experienced this first hand on numerous occasions as the buyers agent and I see it all the time on the sellers side to as my broker is an REO broker who lists many foreclosures every month.I have included a few links to articles that will help you to educate yourselves on the process below:http://blog.equifax.com/real-estate/4-tips-for-buying-a-hud-home/http://www.realtystore.com/realty-guide/how-to-buy-hud-homes/chapter-2http://www.realtor.com/home-finance/homebuyer-information/buy-reo-homes-risks.aspx?

I focus primarily on seller financed rental properties, though I do wholesale or fix n flip on occasion.

I've had good luck with the websites on the one or two occasions where a card did not work.  

As it turns out, HUD ate the fees and we didn't have to pay.On a later occasion, I bought a house on the courthouse steps only to have the trustee contact me to "rewind" the sale.

I know in some areas they want the full down payment (conventional mortgages) upfront. 10% I have done on more than one occasion.

I have attended these on occasion and there is always  ample competition coming from all sides, not just large investors.

Ditto what Jon Klaus said plus on the rare occasions when a tenant has balked at a credit check, I just tell them, "We're giving you control of a $70,000.00 property, of course we're going to check your credit.

On occasion there will be a great/good deal in Oak Park.  

I never had an occasion when they didn't respond after I posted on their door. 

You can still put them on notice saying that it has been noted on several occasions that this person is there which seems to indicate they have been staying in the property in a resident-like manner.