We bought at auction and we paid a great price. We were familiar with the market and we knew exactly how much we were prepared to pay.
We didn't bother going ourselves, we were going on holidays so we sent FIL with inscructions about how much he could bid up to and he got it for a little less than our limit. There can be a lot of emotion in auctions and they're no place for someone who can't control thier competitive instincts but if you can walk away from it (or send someone else) then you might pick up a place for a great price.

Start sussing out the market now - set up an alert with the realestate site and look the weekend papers, drop in on the open homes (DH and I still slow down when we see one), go to a few auctions, get to know the agents and so on.

If you start a shortlist early you might be able to identify a house that has been on the market for a while and hasn't sold. If the vendor is getting desperate they might drop the price big time. If a property falls through at auction hit them up with an offer the next week.