For years we have seen countless TV ads and even received mailings telling of fortunes that could easily be made buying cars and other expensive items for pennies on the dollar at local government seized auto auctions. According to the ads and mailings the government needs to sell cars and luxury items, including million dollar homes, at a fraction of the retail value. Sounds really enticing, right? Can this be true?
Well, it depends. First are you a government or government qualified non for profit? If so you are entitled to first dibs on these and other items and you may qualify for a 25 to 50% discount depending on your status and use. For instance if you are a organization that helps handicapped or blind people and you are chartered by your state government you most likely qualify. The catch is that these items are not for resale and must be used in the nature of the business. That would rule out the Ferraris and such.
Secondly, are you very powerfully and politically connected? Are you going to add to the local economy job and tax base or put major property back on the tax roles and make it useful. If so, you may be able to get some great deals on state owned properties that are no longer needed. The problem here is you will sign a contract with what will be done with the property in question and the local politicians will hold you to it.
Thirdly, the government is not stupid. They want the maximum return on their items. The more they get the more they can do with it. They have superiors who watch the books and each item and where and how it is disposed of. All hot item cars like Mercedes, Ferraris and other high dollar exotics are sold through agents at either nationwide wholesale auto auctions, public auctions or even on Ebay.
The wholesale only auctions are not open to the public and are for auto dealers only. Each state has their own separate rules governing wholesale auto auctions, but they all generally run the same. The car has a set minimum or reserve and will only sell above this minimum. Public auctions tend to get a lot of the stuff no one else wants. And you many times are buying items similar to foreclosures on the courthouse steps, site unseen and history unknown.
If there are liens, levies, unpaid taxes, etc. on these items and you are the winning bidder you become responsible for them. That means a great deal could be the complete opposite a few days later when you find there is a $100,000 IRS tax lien on that house you bid $25,000 for.