Let the Government Find Deals for You
Some real estate investors complain about the government. That's easy to understand. None of us like code enforcement, property taxes, building codes, etc. But the fact is, you should love the government, because it's hard at work creating hundreds of thousands of good deals for you.
Many government agencies acquire properties well below market value and then turn around and sell them to the public. These government-owned properties are not hard to buy. After all, government agencies encourage people (homeowners AND investors) to buy property in communities all over the country. Why? Because it is to the government's advantage to provide safe, well-maintained, affordable housing to its citizens.
Here are several examples of how government agencies acquire properties for pennies on the dollar, and how you can find them:
- Property Tax Defaults
Properties are sometimes seized by county governments due to an owner's failure to pay local property taxes. Check with any county tax assessor's office about their tax sales.
- Bank Failures
The Federal Deposit Insurance Corporation (FDIC) comes into possession of homes and businesses whenever a bank fails and has repossessed assets in its possession. Once they become the property of the FDIC, they are sold at very low prices in order to liquidate them quickly.
To bid, call your local FDIC office or call the FDIC at 877-275-3342. You can also go online at www.fdic.gov, click on Asset Sales, then Real Estate Sales, then FDIC Real Estate for Sale where there is a form you can fill out to get a list of properties specific to your area and needs. After identifying properties in which you are interested, each includes a contact name/number to get further information about that property and/or make your bid.
- Probates
The government sometimes acquires property upon the owner's death after the taxes and other liens have failed to be paid by any beneficiaries. Probate of the estate is frozen until taxes/liens have been paid. In many cases, the heirs prefer to sell the property rather than pay what is owned and go through a lengthy probate procedure to divide the property.
- Foreclosures
The Department of Housing and Urban Development (HUD)
HUD obtains foreclosed properties when the mortgage was insured by the FHA (a division of HUD) and sells them to the public, non-profits, and governmental agencies--usually at discounted prices. HUD properties include all types of single family dwellings (1-4 units) and multi-family dwellings (5 or more units). For further information, call the FHA at 800-225-5342. To locate HUD properties for sale you can find lists in daily newspapers and online at www.hud.gov/homes.
To submit a bid, you must use a licensed real estate broker. HUD uses a competitive budding process on-line at the above-listed site and the bid giving the highest acceptable net return is chosen.
Veterans Administration (VA)
Properties are acquired by the VA when veterans default on their mortgage payments (if it was a VA loan). VA properties are sold through an agent of the VA, Ocwen Federal Bank (www.ocwen.com). These are available for sale to the general public, but not to veterans.
Bids must be made through a licensed real estate broker who is registered to sell VA properties. The VA may pay some closing costs.
United States Department of Agriculture (USDA) The USDA, through their Rural Housing Service (RHS), sells foreclosure properties such as: - Single and multi-family rural housing
- Farm/ranch properties
The properties are offered either directly by the RHS or by a broker. For further information about the purchasing process and to obtain lists of their foreclosure properties, you may call the USDA Rural Development Office at 202-690-1533 or check out their website at www.rurdev.usda.gov.
- Seizures of Criminal Assets
U.S. Marshall's Service (USMS) Asset Forfeiture Program
The USMS offers properties for sale to the public that have been seized by federal law enforcement agencies. They include residential and commercial real estate, raw land, and even personal property (boats, cars, etc.).
To obtain their current National Sellers List--which lists contract service providers and federal agencies authorized to sell these forfeited properties--go online to www.usmarshals.gov or call 888-878-3256.
Some of their seized properties are listed with Fidelity National Asset Management Solutions (FNAMS). Fidelity is a full service national asset management firm (a real estate broker). These properties can be found at www.fnams.com.
U.S. Department of the Treasury
Real estate seized through U.S. Treasury criminal investigations--including homes, condos, and commercial buildings--becomes property of the U.S. Treasury. Most properties are liquidated through cash sales by voice auctions at the actual property's location. For information, call the Department of the Treasury at 202-622-2000. For other important information, go to www.treas.gov/auctions/treasury/rp.
One thing to remember is that most government-owned properties are sold in “as-is” condition. Although rehab work is often needed, the low price--and the big potential for profit when you sell--will usually offset repair costs. We recommend that you inspect any properties for sale--especially those being auctioned. If repairs are needed, you can fix up the property and then either sell it at a profit or rent it out to receive a nice monthly cash flow. (For tips on rehabbing property,
Any way you slice it, there are lots of exciting ways that the government creates real estate deals. There are even more exciting ways that the government acquires and then liquidates those properties. So the next time you are tempted to complain about the government, just remember what a great help they can be when it comes to creating and finding great deals for you!