I don't necessarily consider loans as risky, I'm coming from the point of tying up the loan payment money and having negative interests to pay VS getting that payment money to work for me some other ways (lending, flexibility in negotiations, etc.).

Rates are negotiable.

Does this mean the only way to safely buy at these auctions is to secure redemption rights prior to the auction, by contacting the current owner and negotiating a deal?

We are fairly new to the area, but my wife is a great real estate agent, so we were able to negotiate a pretty decent deal for what we believe is a value added home.  

Although I agree that 100% of your monthly lease payment is not applied to the purchase, both parties can negotiate to have some portion of the rent applied to the purchase, especially if the rentor will pay above market rates.

You might be able to negotiate a deal even if it is company policy to split the listings on your own property.  

My goal is to leverage my soft skills when I negotiate purchase price with seller and focus the transaction on relationship and help instead of price.  

I'm limited to how long I can be at the Office of Records before he fusses, negotiating with a Seller, etc. etc. etc.    

For the most part, if they talk about the house chances are it will be hard to negotiate a reasonable price, not the motivation you are looking for.

They won't negotiate much typically because deals are offered at lower prices to start.