Government Real Estate Auctions
You’ve no doubt seen the commercials in which a man is yelling about government-seized property auctions. Does it seem kind of sleazy, kind of shady? Like maybe you’re taking advantage of the disadvantaged? Au contraire! A real estate auction can be a great way to get into a house. In a real estate auction, the seller is locked in to selling. There’s no backing out at the last second. You’ll probably pay a fair market price – it’s rare for auction homes to be overpriced. In an auction setting, you may have the choice of several properties at the same time. Weeks-long negotiations are eliminated. Purchasing and closing dates are pretty much set in stone, so there’s no last minute changes or contingencies.
Before an auction, there are several ways to prepare:
-Attend an open house to see what condition the property is in.
-Go over with a fine-tooth comb the property information provided by the auctioneer, including the sales contract.
-Make sure you know exactly what is included in the sale and what’s excluded.
-Talk to a real estate agent and an attorney who specialize in auction sales.
There are specialized procedures involved with real estate auctions. According to the U.S. Department of the Treasury, sale participants must register to bid during the specified registration time for the sale. Bring a photo ID and a cashier’s check deposit to register and receive your bidder number. A bidder registration form is available for download on the U.S. Treasury Department web site at http://www.ustreas.gov/auctions/treasury/rp/images/bidderregform.pdf. This form can be printed out and completed prior to the auction. You do not need to mail or fax the completed form, just bring it to the auction to register. Forms will also be available at the auction. You should read and understand the Terms of Sale before you bid. Sales personnel at the auction site can answer any questions you may have.
Property is sold through open, progressive voice bidding. The placement of a successful bid at a Department of the Treasury auction establishes a legally binding contract between the successful bidder and the Government. The auctioneer’s announcement of the high bid amount and the bidder’s number establishes the contract which is subject to final acceptance by the Government. All property is sold “as is.” You do not need a broker to participate.
The bidding progresses quickly during the auction, so pay close attention. Failure to do so or bidder misunderstanding will not be reason enough to cancel a sale, according to the Treasury Department.
Typically, a wide variety of real property is available, including homes, condominiums, commercial buildings, operating businesses and vacant land. The Treasury Department strongly recommends that you attend open houses/inspections. These open houses/inspections are the only opportunity you have to get answers to your questions, since property is sold “as is” and all sales are final. Property may not be available for inspection the day of the sale. Failure on your part to inspect property won’t constitute cause for cancellation of a sale. Consider yourself warned.
Immediately after the bidding, the high bidder will be required to provide their earnest money deposit check. In most cases, the second high bidder will also be required to make a deposit. The Terms of Sale will explain deposit requirements for each property. If you are not the winning bidder, the Treasury Department will not collect your deposit. Check with your bank on their procedures for re-depositing checks. In most cases, they either “void” the cashier’s check or stamp it with “not used for the intended purpose” and will re-deposit the money in your account.
Generally, the Government does not place a minimum bid on items. However, the Government reserves the right to accept or reject any and all bids. There is a reserve price, however. The reserve price is a dollar amount placed on a property by the Government. Reserve prices are not released to the public. If the auctioneer says, “Bidding closed, subject to the acceptance of the seller,” it means the high bid did not reach the reserve price. In most cases, the reserve price is met. In the event the high bid does not reach the reserve price, the Government may open negotiations with the high bidder.
The opening bid is the highest written bid received. If no written bids are received, the opening bid will be established on the floor at the time of auction. Written bids are not disclosed prior to the auction.