hypothetical on a house for IP?

Hi, walking up the street of my IP last week and I found a house for sale:
DETAILS:
-Melb eastern suburb in areas where new eastern freeway will come through
-its a weatherboard (those plastic painted ones).
-4 BR plus study
-1 bathroom
-huge laundry with toilet
-no heating
-good condition on outside
-one car carport
-garden is just grass and over grown with grass
-an average size block (not subdividable)

Excellent location close to shops and private and public schools and station 1 min walk…..2 mins drive to freeway junction…..
-Other house prices for 3 br in the areas is about $250-$280K

ITS A MORTGAGEES AUCTION!
After inspection with RE, bank needs $180-200K to get they money back to service the debt… They want to go to auction…

RENO:
-Outside is in good nick
-inside, sloping floor in loungeroom (like your sitting on the hill)
-new paint and flooring
-new kitchen
-new bathroom 1-install heating for entire house…
-Can make exisitng large laundry into Bathroom 2 easily without changing plumbing
-outside, cut grass and do some minor landscaping…….

Potential worth of house when done :
-Rent $290-300 per week
-Value $320,000-340,000

MY QUESTIONS ARE:
-do banks accept priort offers prior to auction or do they tend to want to go to auction?
-is it worth gettng a building inspection and restumper to view the palce before making any decisions…this will ocst me about $600++

ANY ADVICE FORUMITES???[inlove][inlove][inlove]

Snowflake