I am considering purchasing property at an IRS auction. I’ve done some research but was wondering if there were any hidden pitfalls that I should be aware of, and if anyone has any advice on how to finance the transaction? Thank you in advance for any advice.
You should contact the officer conducting the sale. His/her name should show on the notice. Sometimes they even hold an open house. Since very few people have had equity the last few years, there have been only a handful of IRS sales.
I think they sometimes run sales so that the high bidder has 30 days to complete the sale after paying 10 or 20% down.
Years ago, the individual agents could pull stunts that would get anyone else arrested.
Eg. I had acquired a clear half interest in property. The other half interest had an IRS lien against it. IRS agent held an open house a week before his sale. I asked if he was informing prospects the “winner” would be my partner. He said, “If you show up at my sale I’ll have you arrested.”.
I showed up. Many (most?) IRS sales are closed bid. That means you make one bid on a form and put it in an envelope. Before the sale started the agent announced, “I think Mr. Txxxxr in the back of the room has an announcement to make”.
I was caught by surprise. I simply said, “I just want to tell everyone I hold a half interest in the property and whoever buys it will be my partner.”
The agent then said, “In view of that, I will allow anyone who wants to withdraw their bids.” All 10 or 15 people there did.
What the agent had done was also accepted a bid from an older RE lady and told her she didn’t need to bother to show up in person. About a week or two later found out who it was and contacted her. I thought the poor lady was going to have a heart attack. Like most people at that time (especially older Republican types) [had to get that political plug in for Obama at election time] - she didn’t think her government would actively defraud her. She had an active RE office and agreed she could list/sell the property. She got most of her money back. [This sort of thing went on no matter what party was in power.]
SBA did the same sort of thing. Both agencies pretty much now refrain from abusing both debtors and outsiders.
Thanks for sharing this story miket. Wow!
I’ve only attended one of these IRS auctions. I actually attended because I had an identical house for sale down the street that I was having a hard time selling, so I wanted to see what an auction would bring. My house was nicely cleaned up, we had added granite counters in the kitchen, landscaping, etc. The IRS house was dirty, had original formica counters, needed paint, lawn was dead, etc. The IRS auction itself was an absolute circus, and I was surprised to see the auctioneer and his shills work the crowd to push the price nearly $20k (about 10%) above my listing down the street (as I recall). The buyers were SO happy that they won, and beat all the other bidders. The second highest bidder was the real winner though… he bought my house at full list price and got a better house for $20k less.
That said it may be worth going, you never know with these things.