It's all hit or miss. As far as auctions go there are definately deals to be had. But whether or not you find them or even find a deal on something you'd like to drive is another thing. I know a guy who got a 300ZX TT quite cheap from an auction. Im not talking hundred dollar purchases here, but there is certainly the possibility of saving a grand or 2 from book on a car.
The downside is you're limited to whats there. (which isnt that different then being limited to whats nearby and in your price range.) You also dont have the option of being able to have the car looked over by a mechanic so theres always the risk of missing something major. If you feel fairly confident about your ability (or dad's or friends or whomever else may go) to be able to spot a lemon it certainly is worth checking out. Just don't expect anything in particular and know when to say when.
I read a great Super Street article about a guy going to an auction that was gonna have a low end Ferrarri. He set his limit at 18K i think. Turns out it sold for well over that. By not focusing too much on that he managed to pick up a Lotus Elan relatively cheap. Bew open and have fun. If you don't see anything worth buying, oh well, no biggie.
