NEW YORK (MainStreet)You've heard the stories: going to a government auction and buying seized and forfeited property for next to nothing. Snagging the drug mule's late-model black Escalade for pennies on the dollar. The white-collar criminal's luxury yacht purchased for a song. The repossessed high-rise condo por nada. Is it the real deal or another urban myth?
Ian Aronovich, the president of www.governmentauctions.org, a website collection of auction information, says that once property is no longer needed to be held as evidence in a criminal matter, it is offered at public auction. And yes, he's seen his share of unusual bargains.
Government auctions put up for bid items as diverse as Unibomber Ted Kaczynski's hoodie and Harvard diploma to Bernie Madoff's money clip. Not to mention one of the best bargains Aronovich has ever seen: ATM machines.
Normally selling for $1600 new, and even as much as $1000 used, Aronovich saw ATMs sell in a lot of 50 for what amounted to $14 each. Cash not included. Even considering transportation and storage, that could still be a pretty sweet profit. If you know a buyer.
Government customs auctions can find pallets and containers of seized merchandise for sale, including clothing, car parts, televisions, computers and house wares. And that thermal imaging camera you've been looking for.
Also see: Living in a Van to Pay Off Student Debt>>
"The average person doesn't need a thermal imaging camera, but they use them in the building industry," Aronovich says. "There was a very high-end Flir Thermal Cam, a handheld infrared camera which retailed for like $12,000. The one at this auction sold for $700."
The range of bid items can be massive, from a 48-foot yacht to military vehicles. A recent auction included Kansas City Motor Speedway tickets. Search lights, body armor -- floating toilets and 28,011 rolls of toilet paper are out there. Be prepared.
Mercedes sedans are popular with ne'er-do-wells and make frequent appearances on the auction block. But there's usually something for everyone: designer shoes, handbags, watches -- as well as diamond and gold jewelry. Mob Wives are all about the bling, you know. And of course, today's criminal is connected in more ways than one. Auctions often include laptops, GPS systems, TVs, and iPhones.
One auction included a 21-foot miniature submarine. High bidder? Bond. James Bond.
If you are looking for real estate, a government auction could be your ticket to a new neighborhood.
Tim Minoughan, a New Jersey-based deputy program manager for CWS Marketing Group, a contractor for Treasury real estate auctions, says the company stores, maintains and sells seized and forfeited real estate for the Department of Treasury. This includes property from Homeland Security investigations, the U.S. Customs and Border Protection, the IRS criminal investigations division, the Secret Service and U.S. Marshals service.
Like the "general order merchandise" auctions of boats and bling, these properties have been seized as "purchases made with ill-gotten funds" from money laundering, drug dealing, embezzlement and other nefarious activities.
It's the old "if these walls could talk" thing.
Minoughan says the firm handles an average of 125 real estate treasury auctions each year that run the gamut.
Also see: 6 Simple Ways to Lower Your Energy Costs This Summer>>
"Anything from $1 to $2 million condos to parcels of land worth $8000," he said. "I have a single-family home in upstate New York valued at $54,000."
What's on your shopping list? The California country club seized in a fraud scam? Or, perhaps the majestic home on five acres in Upper Brookville, New York with five bedrooms, seven and a-half baths, sun room, swimming pool and spa?
Something with a bit more elbow room?
The 20,000 square foot historic Redstone Castle may be what you're looking for. A Tudor-style estate with 42 rooms, on 150 riverfront acres was seized by the IRS to recoup the tax debt from a $56 million fraud scheme and sold for a tidy $4 million. That's just for the castle, carriage house and stable complex. The adjacent Victorian "bonus" home sold for an additional $480,000.
Looking for investment property? 42 condo units and a farmhouse parcel in Park City were auctioned off for just over $15 million.
The best deal Minoughan has ever seen on the block? Probably be the mob-run "gentlemen's" club recently auctioned.
"I just did four properties in Seattle, and the guy that owned the property next door said we gave those properties away," Minoughan says. Situated in a high traffic area of the city, it was the site of "an old strip club where a guy was laundering money." He says the buyer is going to tear the joint down and build a restaurant on the site.
In fact, as one of Seattle's most infamous cabarets called Rick's Nightclub was part of the prurient property portfolio of organized-crime figure Frank Colacurcio Sr. -- an empire of strip clubs that spanned ten states.
"It's a great location, and when you can pick up a whole corner of an intersection, it's a rare opportunity," he says.
Also see: Tough Times for the IRS RoboCop>>
But Minoughan also admits it can be hard to find bargains in some cities.
"I just did a condo in New York City and half the people couldn't believe it went for so much," Minoughan says. "But the condo market in Manhattan is like gold. There are no real discounts in Manhattan."
You don't have to be a professional bidder to get in on these auctions, and in fact most attendees are simply interested locals, according to Minoughan.
"I would say that 75% or more of our buyers are end-users," he says. "They're buying it to live there and may or may not have ever been to an auction before." But being a novice means doing some homework. Aronovich and Minoughan offer some auction tips:
- Call out your bid; don't just raise your hand. You don't want any confusion on how much you're willing to pay, right?
- Watch your hands, gestures may be interpreted as a bid.
- Research the price of the item you are interested in and determine the most you're willing to pay. Then stick to it. "Just like there are NADA guides for cars, there are price guides for everything: for electronics, for coins, for musical instruments, you name it. Those are all good starting points," Aronovich says. And Minoughan adds that Zillow.com is good for determining comparable neighborhood real estate prices.
- Aronovich also says there tend to be better deals at the beginning and near the end of auction because there are less people in attendance. People leave after they've made their purchase, while others arrive late. If you can find something worth bidding for at the beginning or the end of an auction, you're likely to get a better deal.
- Be prepared to pay. Most federal auctions accept credit cards for purchases up to $5000, but for larger purchases you may want to carry cashier's checks in various denominations to account for your particular purchase price or down payment. You can re-deposit the cashier's checks you don't use.
Also see: IRS Issues New Home-Office Deduction>>
"Get a price you're comfortable with and stick to that," Minoughan advises. "A lot of times people get caught up in auction fever and they were going to spend $350,000 and that was it -- the next thing they now they're up to $400,000 and they are the high bidder and then they've got buyer's remorse."
You can find auction dates and locations on the web at www.cwsmarketing.com, www.governmentauctions.org or at the Treasury website. Auctions held in your area will also be advertised in local newspapers and legal notice publications.
--Written by Hal M. Bundrick for MainStreet
Also see: Divorce and the New Wheels Dilemma>>