Government Foreclosure Auction: What Is It?

Foreclosure often brings confusing thoughts to some people who don’t really understand the process or how it can benefit some people. But the government, and not just banks, can also seize property, farms, ranches, condominiums or mobile homes. For example, if you owe a lot of back taxes or default on a veteran’s assistance loan, the government can foreclose on your property.  Sometimes, the government decides to use the property for social programs, but mostly they just sell in a government foreclosure auction.

Basic Operations

Finding government foreclosure auction listings for free is rather easy these days. You can use a paid service, but why bother? If you can get online and search for the U.S. Treasury Department’s webpage you will have the listings at your fingertips. In addition to finding homes listed, they also have everything from office equipment to boats.

Changes By State

Government foreclosure auctions are a little more complicated than the usual auction where you show up and raise your hand, pay and immediately take the item home.  It’s more like an eBay auction. Each state has its own set of guidelines as far as when, where, and how you place bids on these properties. While in one state you may need to bring a small percentage of your bid amount to win a home, while in another state it is required you bring the full amount in order to win the home. Make sure you are clear on what is required in the state your auction takes place in, so you are prepared to pay whatever is required up front.

What About Caveat Empor?

As with any auction, there is no backing out of the deal once you are the winning bidder. If you were buying a home through any other means you would of course find out as much as possible regarding the property to ensure you wanted to purchase it, and that goes just the same with a government foreclosure auction. You will have to find a way to verify the condition of the property in question on your own.  Since some properties may still be occupied, it can be difficult to inspect the property.

If you really have your heart set on the property, you may be able to work out a deal to buy the home from the people still living in the house. In this way, the government foreclosure auction is stopped. But you have to check with the broker assigned to handle the auction. Again, laws vary from state to state.

U.S. government agencies do not actually directly oversee a government foreclosure auction. Nothing would ever get sold. The task of organizing and carrying out the auction is in the hands of local brokers and real estate agents who know the state law.