Since 4 percent is lower than 5 percent, the 4 percent bid is a better deal for the owner, so that bidder “wins” the auction, not you. 

If I can score some cash flow, I'll take the win, but my plan is to at least break even in payments.

Sue them (good luck, even if you win, will they have any assets to attached). 

They might not require major upgrades, but they can have a greater initial cost and offer instant income flow.Keep in mind that every market is different, and strategies that are successful in one may not be in another.

Investment Info:

Single-family residence wholesale investment.

Purchase price: $40,000

Sale price: $63,000

Contributors:
Peter Vekselman

Partner Driven, in collaboration with Mark Mil...

Does the situation ever arise where the winning bid at auction is less than the foreclosing lien?  

That is a huge win and your future self is thanking you already.

Take your winnings and go go go!

One potential word of caution: I asked ChatGPT to compute the IRR of a fund based on certain criteria (which is normally alot of work), and it spit it out instantly with a ton of analysis and which all looked and sounded super impressive.

You win the real estate game by never running out of cash and never being forced to sell.