Driving there I assumed $20k would be max bid for me.

on hubzu.com  (was bidding on the property for about 6 months now.   

I can educate myself on finding a good deal, but how is the escrow handled when the wholesaler takes your cash with the intention of buying the house they put the bid on? 

It doesn't matter to the IRS that you got out bid or no longer want the property. 

I was highest bidder on auction at hubzu at 131 and they charge 5% auction house fee (6.5k)but i didn’t the reserve. they decieded to review and consider my bid and will let me know in 10 business days.

Or just bite bullet and get the house for what i bid

So I'm trying to do some research on a property that I want to bid for at an upcoming foreclosure auction. 

When we got there our agent informed us that an offer had been made on it the previous day and the seller was holding off on responding to it so that we might also have a chance to be considered if we chose to bid.

If you decide to place an offer and it's going to be short you may want to get some contractor bids, etc to support your offer. 

Seems like it could be efficient and make sure everyone is bidding the same.