Government auctions: Someone's forfeiture can be your
If you're in the market for a house or a car, you
may want to add a federal government auction to your list of places
Actually, you can find anything from real estate,
boats and planes to computers, jewelry and clothes at a government
The federal government also auctions things such as
airwave rights and forklifts, and county and city governments often
auction property. But probably the best government auctions under
one roof for consumers are put on by the U.S. Treasury Department.
Most of the real estate and merchandise has been seized
from someone because of drug trafficking, money laundering, import
violations or some other illegal activity -- or it was forfeited
for nonpayment of taxes.
Their loss can be your gain if you know what you're
"It's mayhem," says Walt Strzalkowski, president
of Yacht Search in Fort Lauderdale, Fla., who is also a pilot. He
went to a government auction hoping to buy some real estate but
ended up buying a single-engine plane.
"I saw the real estate selling for two and three
times what I thought it was worth and I was astonished. I didn't
even bid. It was mind-boggling. I knew what the airplane was worth,
and when I saw the bidding drop off at a price lower than what I
thought it should sell for, I jumped in."
Even if your budget limits you to smaller-ticket items
such as computers, cameras or jewelry, be prepared for plenty of
competition and know the value of the items you're considering.
"The guy is up there to confuse you," Strzalkowski
says. "The idea is to build this aura of excitement and confusion.
It forces people to think quickly and make a decision -- make a
knee jerk reaction -- and it gets worse when there are two or three
people who really want something and bid up the price."
A Treasury auction can be a good place to get your
feet wet if you've never been to an auction. There's no entry fee
and there is no buyer's premium. Some auctions tack a 10 percent
to 15 percent premium onto your purchase to pay for their costs.
And, according to Britney Bartlett, spokeswoman for
EG&G Technical Services, the contractor that runs the Treasury's
auctions, many times you don't have to pay sales tax because you're
buying from the government. But check with your local Treasury auction
staff to make sure.
"We don't have shill bidders. There's nobody
placed there to drive up the price," says Bartlett. "You'll
see quantity and quality that you won't see at other auctions."
Preview the goods
Every Treasury auction has preview days when you can check out the
Bartlett says you may get two weeks to look at a house
prior to auction. Vacant land can be inspected anytime, unless there's
controlled access. Personal property can often be viewed one or
two days in advance of the auction. The time and place are announced.
If you see something you like, do some research to
determine how much it's worth, says Victor Wiener, executive director
of Appraisers Association of America.
"Anyone walking into an auction should have a
certain comfort level. Be very clear about what you want and how
much you want to commit. Don't be carried away by what others are
doing. Know what type of mistake you can live with."
All merchandise is sold "as is." Many of
the computers that are confiscated because they were used to commit
a crime won't have a hard drive. Some cars won't have a fuel tank.
Whenever something major is wrong with an item, it will be noted
on the item.
"Bid accordingly," says Bartlett. "If
you didn't have a chance to turn on a computer, what's it worth
to you if it doesn't work? Cars might not be worth the sum of their
parts. Resist the urge to buy something you haven't inspected."
Treasury auctions are held about every nine weeks at sales centers
in Los Angeles, Edison, N.J., Miami/Fort Lauderdale, El Paso, Texas,
and Nogales, Ariz.
Treasury auctions are held in locations around the country as
The above-linked Web sites will list the merchandise
that's available two to three weeks in advance, and in the case
of houses and buildings, there will usually be a picture and a detailed
Be prepared to pay
All purchases under $5,000 must be paid in full the day of the auction.
Purchases over $5,000 require a deposit. If you're bidding on a
big-ticket item, such as a boat, plane, house or even some cars,
arrange your financing in advance.
"We don't mess around," Bartlett says. "You'll
forfeit your deposit if you're turned down for financing."
On big ticket items you'll have to pay 10 percent
of the total within three days, and you'll have to close the deal
within 30 days.
Be prepared to pay with cash, cashier's check, Visa
or MasterCard. No personal or business checks are accepted.
Also, not all merchandise is released on the day of
sale. The government agency that seized the item will do a background
check on you to make sure you're not the person it was seized from
or a known associate of that person.
All of that type of information can be found in the
conditions of sale. The conditions are posted in plain sight or
are available in a handout at all auctions. The conditions detail
whether the buyer is liable for premiums, when payment must be made
and in what form, and other important things such as whether the
buyer has to prequalify.
The government also lists conditions of sale on its
site , but if you go to a Treasury auction be sure to read the
conditions specific to that sale.
Don't expect to buy a Ferrari for $1,000 unless it's
in such bad shape that's all it's worth. The government reserves
the right to refuse the highest bid if it doesn't reflect the true
value of the item. Money from the auctions goes into the Treasury
Asset Forfeiture fund to help law enforcement and make restitution
to crime victims, according to Bartlett.
Walt Strzalkowski says he tries to become familiar
with anything he's interested in buying so he knows if there's potential
to buy the item at a good price. He doesn't, as he puts it, "go
in drooling to buy something."
"I think that's the important thing with an auction
-- you can't be emotional. You have to be knowledgeable and put
limits on what you're willing to pay. Auctions are to benefit sellers,
not buyers. Put your emotions aside and don't bid on something if
you don't know what it's worth. Be prepared to back away if it's
higher than your assessment of the valuation."
If you want to go to a government auction, make sure
it's the real thing. Some companies try to capitalize on the government's
success and say they're selling seized government property at auction.
All ads for Treasury auctions have the seal of the
Treasury and the name EG&G Technical Services. Ads for auctions
at the major sales centers are placed in the Wall Street Journal
and USA Today, and in your local newspapers if there's an auction
in your area. Also, the receipt for any item you purchase should
list the name of the government agency that seized it.
Another tip -- don't waste your money on books that
bill themselves as "Guide to government auctions," or
something similar. Bartlett says all the information you need about
government auctions is free online on government Web sites.
Here are a couple of sites with good information.
-- Posted: June 12, 2002