Residential Real Estate Broker · Bremerton, WA · Member since 2013 · 494 posts · 142 votes
To clarify - GSA is the General Services Administration, a branch of the gov't that buys property (residential property) for gov't use and then will sell it later at auction to recoup their expense (is this accurate? I read this "on the internet"). The auction site is gsaauctions.gov . I'm checking to see if this is legit.
Anyone used this before? Have experience buying a property this way? If so, do they get bid up high and how long does the process take?
Hi Brian - I ended up bidding on a GSA property. My experience was that it tied up my money and the property ended up getting bid up past market value. Plus, GSA did not follow a very strict auction format, they would extend the auction if it would help them get a higher price - not cool. The process just went on and on. When they eventually got a bid, others started bidding (because it was deemed safe?!?), and then GSA kept extended the bidding period (which is in their contract, btw). When the property bidding seemed to have stopped, they closed the bidding. Basically, GSA did what was in their best interest. It did not seem to be a true auction. Steph
I bought one from them. Basically what they did to you, they tried to do to me after I had won the auction. They told me the amount was not high enough and tried to extort me for more. I told them that since they could change the rules on me , I would do the same with them and I demanded my deposit back with interest and that I was not interested in wasting any more time and money with them and was under the assumption that it was an auction, and since I had won, they needed to honor our deal.
After much huffing and puffing and swearing to tell everyone I know not to buy houses from them that way, they gave in. The clue that I was dealing with incompetant people was when I won the bid, and then they started the process of evaluating what the home was worth, (BPO's appraisals, etc.) Would'nt common sense dictate that stuff should be done BEFORE the auction? At the end of the day, they were just trying to get top dollar from the property, I just wished they would have made that clearer before I sent them $10,000 for the right to bid. Probably won't play that game with them again. I did get a fair deal on a nice home though.
I went to view the property today. It is the government selling residential property. There was a gov't representative there. The property was owned by a soldier. The soldier received unexpected orders and was unable to sell due to the timeline, so in some cases like this (the rep said) the gov't will buy the house from the soldier. I asked if this was a foreclosure, and he said no. It was due to receiving unexpected orders. The gov't then auctions the property and tries to recoup taxpayer money.
Other details:
- You get to look inside and inspect as much as you can during a 2 hour period. I did not realize this is what was going on today (rookie mistake). The paperwork on the website said you can inspect property before purchase. It did not say inspection can only be done during the open house. ok. I suspected something like this may happen, so I brought everything to inspect the house except a ladder and was able to check out many things, but not as much as I'd of liked.
- They only provide QD.
- The "auction" isn't much of an auction. There is no set end date/time. If bidding is hot or really dead, they'll keep the auction going to try to get as much money as possible.
My concerns:
- This has elements of a sheriff's sale auction. Not much of an inspection opportunity (I was barely able to inspect property and did not see roof/attic area).
- Only provide QD.
- Potentially long auction set up may tie up my cash.
Benefits:
- Only one guy other than me viewed the property. Another investor. He inspected it like I did. Not much competition.
- Ideal location, great neighborhood, well-built house and was maintained.
- The spread is potentially fairly wide. ARV is $210K. I estimate repairs at $9000. The roof looks almost new and well constructed - I don't see anything concerning. They'll allow me to take my roof guy up there and inspect it anytime. We just can't go inside the property and look at attic. ($18,000 with a re-roof which is ultra conservative). Not sure what to set my max bid at - I'm approaching this more like a foreclosure sale due to the lack of access to information, lack of proper inspection, etc. So there's more risk. Therefore, lower price.
Other:
The gov't rep did go over the inspection that the US Gov't had when they purchased the property as well as their title report. I was able to see all documents. Obviously, I will do my own title search, etc. But, was good to see the documents.
What do you all think? What would be my next step?
If I do end up bidding on this, I'm skeptical of bidding too aggressively because it's an auction. What do you think about the bid amount? GSA did not provide much opportunity for inspection. I am going to call the rep tomorrow, though, and see if I can wiggle my way back into the property for a proper inspection. The gov't reps do seem reasonable.
Investor · Harker Heights, TX · Member since 2013 · 69 posts · 17 votes
13y
Interesting concept! Although I have no input or experience, I'll certainly bee looking forward to hear what others may have to say or what you find out!
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
13y
It seems pretty straight forward, especially since you got to do a decent inspection. Get a title search, and make sure you understand their particular online bidding system. With a title search, the QCD doesn't concern me. Good luck!
Residential Real Estate Broker · Bremerton, WA · Member since 2013 · 494 posts · 142 votes
13y
Hi Greg! Thanks for responding (at least I know the post is working!)...I'm not sure anyone knows about this - this post isn't getting much response (well, almost none - you me and a guy telling me how to a link).
I have a call into my atty. and I'm thinking this needs to be approached much like a foreclosure auction, which I know very little about (better safe than sorry). I need to do all title research, etc. before bidding. It does seem safer than foreclosure auction b/c I was able to view the inside and have access to full exterior inspection. Further, the gov't rep is an RE atty. and said "it's ultimately your responsibility to make sure it has clear title, but we only buy properties with clear title." Then, he obtained the property docs from his car, and we went through them together and confirmed "Yep, this has clear title and here's what showed up on inspection...".
Residential Real Estate Broker · Bremerton, WA · Member since 2013 · 494 posts · 142 votes
13y
Thanks, Wayne!
Can I simply go to my title company then and have them run title and they'll make sure everything is clear for me? I've never done this on my own before. I've used two title companies - one for REO purchases and one for FSBO's (the FBSO also works with most investors in town).
Residential Real Estate Broker · Bremerton, WA · Member since 2013 · 494 posts · 142 votes
13y
Thanks Wendell De Guzman - that's about what I came up with, also. I'm going to adjust a bit also due to this being an auction where I didn't get the best inspection opportunity - build a bit more of a cushion than I probably need.
Investor · Harker Heights, TX · Member since 2013 · 69 posts · 17 votes
13y
Stephanie Dupuis--Good luck! I may continue to look into this avenue as well. I'm in the military, and I think this GSA auction site (for residential properties) includes the houses that the government has bought from Soldiers that have been forced to move due to military orders or because of BRAC relocations (If I remember right, the program was part of the TARP and/or HAP programs set up a few years ago). So the residential properties are being auctioned not because of foreclosure, but because a military member was forced to locate, and this program was a way for them to get out of their property without having to do a short sale or possibly have their house sit on the market for months while they were deployed or moved to another location.
I look forward to hearing about your continued progress with this opportunity!
Residential Real Estate Broker · Bremerton, WA · Member since 2013 · 494 posts · 142 votes
13y
Greg Fend - You are correct on the GSA program. They are auctioning properties purchased from soldiers as you stated. I was able to confirm this yesterday. GSA stated/confirmed these are not foreclosures.
However, I'm proceeding with caution. GSA only offers QD (Quickclaim Deed) which doesn't concern me too much. GSA also will not guarantee title - no title insurance. So, far this sounds to me like a sheriff's auction disguised as a bunny rabbit. It's also an area of REI I'm not very familiar with and I'm learning as I go.
Oh, the GSA Reps repeatedly state that GSA will only accept bids at FMV. This makes no sense to me b/c I don't know anyone who will meet GSA's auction conditions ($5,000 EMD, QD, no title insurance, slow process with no guarantees or protections) AND pay FMV. Either GSA is posturing or this will be a waste of my time.
Investor · Harker Heights, TX · Member since 2013 · 69 posts · 17 votes
13y
I think it's worth a shot to see if you can put in a low-ball bid and see if they'll take it. I'm guessing that GSA will not put any effort into maintaining these properties they are trying to offload, so the government being what it is would rather take some money instead of no money.
I also am not a fan of how long the process could take. It essentially sounds like the GSA could keep the auction open indefinitely until they get some sort of bid that they feel is appropriate. If I clicked the bid button on one of these places, I'd want to know the results sooner rather than later. It could put other deals into limbo while waiting for the auction to close!
Residential Real Estate Broker · Bremerton, WA · Member since 2013 · 494 posts · 142 votes
13y
Originally posted by Greg Fend:
I think it's worth a shot to see if you can put in a low-ball bid and see if they'll take it. I'm guessing that GSA will not put any effort into maintaining these properties they are trying to offload, so the government being what it is would rather take some money instead of no money.I also am not a fan of how long the process could take. It essentially sounds like the GSA could keep the auction open indefinitely until they get some sort of bid that they feel is appropriate. If I clicked the bid button on one of these places, I'd want to know the results sooner rather than later. It could put other deals into limbo while waiting for the auction to close!
Yup! I'm not so sure this is going to be a good deal or not. Only experience will tell. I've already learned that what the GSA says isn't necessarily what will happen. I'm going to be able to get in and inspect again (probably) before I bid. If I can get clear title and inspection, I may be able to finance. Will post progress.
Investor · Harker Heights, TX · Member since 2013 · 69 posts · 17 votes
13y
Stephanie Dupuis- I've decided to give it a shot and have started to bid on a SFH in San Antonio. Even if I don't end up getting it, at least I'll gain some experience using the system. So far so good! I'll keep you posted.
Residential Real Estate Broker · Bremerton, WA · Member since 2013 · 494 posts · 142 votes
12y
Hi Brian - I ended up bidding on a GSA property. My experience was that it tied up my money and the property ended up getting bid up past market value. Plus, GSA did not follow a very strict auction format, they would extend the auction if it would help them get a higher price - not cool. The process just went on and on. When they eventually got a bid, others started bidding (because it was deemed safe?!?), and then GSA kept extended the bidding period (which is in their contract, btw). When the property bidding seemed to have stopped, they closed the bidding. Basically, GSA did what was in their best interest. It did not seem to be a true auction. Steph
Investor · Harker Heights, TX · Member since 2013 · 69 posts · 17 votes
12y
Brian Phillips , the one time I've tried it, the bidding went above what I was willing to pay, so I bowed out. Took a couple of weeks to get my deposit back.
Hope you have good luck! Post your experience when you win!!
Greg
Hi Brian - I ended up bidding on a GSA property. My experience was that it tied up my money and the property ended up getting bid up past market value. Plus, GSA did not follow a very strict auction format, they would extend the auction if it would help them get a higher price - not cool. The process just went on and on. When they eventually got a bid, others started bidding (because it was deemed safe?!?), and then GSA kept extended the bidding period (which is in their contract, btw). When the property bidding seemed to have stopped, they closed the bidding. Basically, GSA did what was in their best interest. It did not seem to be a true auction. Steph
I bought one from them. Basically what they did to you, they tried to do to me after I had won the auction. They told me the amount was not high enough and tried to extort me for more. I told them that since they could change the rules on me , I would do the same with them and I demanded my deposit back with interest and that I was not interested in wasting any more time and money with them and was under the assumption that it was an auction, and since I had won, they needed to honor our deal.
After much huffing and puffing and swearing to tell everyone I know not to buy houses from them that way, they gave in. The clue that I was dealing with incompetant people was when I won the bid, and then they started the process of evaluating what the home was worth, (BPO's appraisals, etc.) Would'nt common sense dictate that stuff should be done BEFORE the auction? At the end of the day, they were just trying to get top dollar from the property, I just wished they would have made that clearer before I sent them $10,000 for the right to bid. Probably won't play that game with them again. I did get a fair deal on a nice home though.
Hi Brian - I ended up bidding on a GSA property. My experience was that it tied up my money and the property ended up getting bid up past market value. Plus, GSA did not follow a very strict auction format, they would extend the auction if it would help them get a higher price - not cool. The process just went on and on. When they eventually got a bid, others started bidding (because it was deemed safe?!?), and then GSA kept extended the bidding period (which is in their contract, btw). When the property bidding seemed to have stopped, they closed the bidding. Basically, GSA did what was in their best interest. It did not seem to be a true auction. Steph
I bought one from them. Basically what they did to you, they tried to do to me after I had won the auction. They told me the amount was not high enough and tried to extort me for more. I told them that since they could change the rules on me , I would do the same with them and I demanded my deposit back with interest and that I was not interested in wasting any more time and money with them and was under the assumption that it was an auction, and since I had won, they needed to honor our deal.
After much huffing and puffing and swearing to tell everyone I know not to buy houses from them that way, they gave in. The clue that I was dealing with incompetant people was when I won the bid, and then they started the process of evaluating what the home was worth, (BPO's appraisals, etc.) Would'nt common sense dictate that stuff should be done BEFORE the auction? At the end of the day, they were just trying to get top dollar from the property, I just wished they would have made that clearer before I sent them $10,000 for the right to bid. Probably won't play that game with them again. I did get a fair deal on a nice home though.
What size and kind of markets have you folks been participating in GSA auctions? I am inclined to believe that some of these HAP homes being auctioned on the GSA website might end up being a deal in smaller towns with less investor activity.
Investor · Harker Heights, TX · Member since 2013 · 69 posts · 17 votes
12y
@Michael S., I tried my hand at one in San Antonio. I didn't get it...the price went above what my target range was. But, that doesn't mean I wouldn't try it again in the future!