Anyone Have Any Experience With The GSA/IRS Redemption Program?

Curious about this one. Anyone have any experience with it?

Here's the info from the GSA web site:

GSA/IRS
Redemption Program



Questions and Answers

Q. What is the Redemption Program and how does it benefit the taxpayer and the Government?

A.This is a win-win program for the IRS and the taxpayer. In the event of a foreclosure by lenders due to borrower default on payments, if there is an IRS tax lien on the property, the IRS may exercise its lien rights. IRS has the right to buy the property from the party that bought it at the foreclosure sale. The taxpayer may benefit when IRS redeems the property because the IRS recovers the value of its lien and sale costs, and refunds anything over these costs to the taxpayer.

Q. Do you automatically send out the list of redemption-eligible properties?

A.No, you must call GSA toll-free at 1 (800) 421-7848 each time you want the current list. By following the instructions on the recording you can have the list sent to your FAX machine or sent to you through E-mail or regular mail.


Q. How often do you update the list?

A. The list is updated whenever new listings are received from the IRS or whenever there is some other change. The list rarely goes two weeks without an update.


Q. What do you mean by the term "guaranteed bid"?

A. IRS must find a bidder willing to guarantee the Minimum Bid Price (MBP) before the IRS can exercise its lien rights and acquire the property. That bidder becomes the "guaranteed bidder". Once the property is acquired by the IRS, the property is offered to the general public at competitive sale. The MBP is considered the first bid at the public sale. If there are no additional bids at public sale, then the guaranteed bidder must complete the purchase within 45 days. The guaranteed bidder may increase his/her bid at the public sale. If the guaranteed bidder is "outbid" at the public sale, then the guaranteed bidder is eligible to receive an incentive fee when the sale closes. However, if the guaranteed bidder bids above the MBP and becomes the high bidder, the guaranteed bidder does not receive an incentive fee.


Q. What exactly is the incentive fee?


A. In the event a lender forecloses on a property with an IRS lien, the IRS has 120 calendar days to redeem the property. The IRS regulations require that before IRS can request money from the U. S. Treasury to buy the property, IRS must first obtain a guaranteed bid at the price paid to redeem the property. The Minimum Bid Price (MBP) which is established by the IRS consists of the cost to redeem the property from the present owner, the lien interest amount and the cost to cover the sale. If GSA can obtain a guaranteed bidder before the listing expires, then the IRS will exercise its redemption rights. Without the guaranteed bid, the IRS would not have an opportunity to recover any revenue. To encourage guaranteed bids, we provide this incentive fee. We will pay an incentive fee to the guaranteed bidder if a) he or she is not the high bidder at the public sale because they are outbid at the public sale or b) the IRS does not redeem the property after we have accepted a guaranteed bidder for the property ($100 incentive fee). Incentive fees can range from $500 to $1,500 if the IRS redeems the property and is sold. Incentive fees are payable at closing. The amount is published on the GSA / IRS redemption listing.


Q. If I become the guaranteed bidder and somebody outbids me at public sale, will you return my bid deposit and pay me $500 minimum after the property closes?

A. Yes. But remember you must be ready, willing, and able to buy the property, if we can’t sell it for more than the MBP at the public sale.


Q. What happens if GSA receives more than one guaranteed bid on the same property?

A. Whenever we receive a guaranteed bid, it is listed on the GSA / IRS Redemption Program Listing. The announcement states that if no higher guaranteed bid is received within 3 business days, we will accept the guaranteed bid we have. The highest bid received will be considered for award. In the event two or more bids are received that are equal in all respects, the first such bid received will be considered.

Q. How does the IRS recover revenue in this program?

A. IRS recovers the amount of the tax lien and sale expenses from the sale proceeds. Any amount in excess of these costs goes to the taxpayer.


Q. As guaranteed bidder, can I bid at the public sale?

A. Absolutely! Your guaranteed bid becomes the first bid at the public sale.


Q. How is the MBP established?


A. The MBP is made up of three things: (1) the amount needed to reimburse the owner for his/her purchase price plus costs, (2) minimum amount paid towards the satisfaction of the taxpayer account (IRS tax lien), and (3) an amount to cover our sale costs.


Q. Does the MBP change?

A. Occasionally the amount will change as more information comes to light. If the amount changes after you become the guaranteed bidder, only the Guaranteed Bidder will be given an opportunity to either amend his offer or cancel it without obligation. This is also true if some previously unknown lien comes to light. It can also change as a result of another prospective guaranteed bidder submitting a higher bid within three business days of the initial bid.

Q. Are there any further redemption rights? Can someone take the property away from me? Are these properties encumbered with liens?

A. On redeemed property, there are no additional redemption rights. If the first mortgage holder is foreclosed, all the junior liens are eliminated with the exception of the IRS redemption right. Occasionally, a second mortgage will be the cause of the foreclosure action and in such cases, the sale is subject to the buyer assuming the first mortgage obligation. The IRS Redemption Program List provides information on the mortgage and unpaid real estate taxes owed. When the IRS acquires the property, the IRS lien is eliminated.


Q. What if I offer to pay off the IRS lien? Can I get the property that way?

A. No. The only party that can pay off the IRS lien is the present owner of the property. Paying off the lien does not give you clear title to the property unless you already own it. Occasionally, the foreclosure sale buyer will pay off the lien so the IRS will not redeem the property from them. If this happens after you have become the guaranteed bidder, we will return your bid deposit plus a $100 incentive fee. This is in recognition of your effort to become our guaranteed bidder.


Q. If there is a guaranteed bidder why does the Government put the property for public sale?

A. IRS rules require that property be sold by competitive bid sale. The competitive process assures that the Government is getting a price for the property which is established by the market.


Q. When a property is for sale, what is the chance of getting more than the MBP?

A. We are very successful at selling property. We sell property for a number of Federal agencies in addition to the IRS and have been doing this since 1944. IRS redeems those properties with enough equity to provide a sale price greater than the MBP.



BECOME A GUARANTEED BIDDER!

Call GSA tollfree at
1-800-421-7848
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