Buying commercial property from the government or the FDIC

Government sellers don’t negotiate the way private sellers do. They publish terms, take bids, and close on their schedule, and most of the risk of a bad surprise sits with the buyer. Here is how the sellers on our public sales watch work.

U.S. Treasury seized property

Treasury sells real estate seized by the government through its sales agent, CWS Marketing Group, by online auction and broker sale. Its general terms are the ones to read before you register:

• It’s a cash sale. The terms say plainly that the government doesn’t provide financing and the sale isn’t contingent on yours.
• As is, with all faults, including any building violations. Do your inspection before the auction; the government makes no warranties.
• Tight timing. The winning bidder returns the contract within 24 hours, delivers 10% of the price, less the initial deposit, within three business days, and closes within 45 calendar days of the date the government signs.

That last point is why buyers who need a loan should have one approved before bidding. A lender needs an appraisal, title and environmental review; 45 days is tight for all of it.

Caltrans excess land

Caltrans sells land it no longer needs for highways, currently all unimproved vacant parcels, by sealed-bid or oral public auction, with bids opened at a district office or by livestream. Each listing has a brochure with the minimum bid, deposit and terms. Land is hard to finance with a conventional loan, so plan on cash or a land loan from a bank that knows the area.

GSA surplus federal property

The General Services Administration sells surplus federal buildings and land at realestatesales.gov, including offices, warehouses and industrial sites, by online auction, sealed bid and broker sale. Each listing has its own terms. Its site asks automated tools not to read it, so it isn’t on our watch; check it directly.

FDIC loan sales and real estate

When a bank fails, the FDIC sells the loans the acquiring bank didn’t take, usually in pools, through four loan sale advisors (First Financial Network, Mission Capital, Newmark and DebtX). Buying a defaulted commercial real estate loan is a way to get to the property: you step into the lender’s position and can work out or foreclose. To bid, the FDIC requires, as part of registering with the loan sale advisor, a confidentiality agreement, at least $1 million of net worth, an OFAC certification and a $50,000 refundable security deposit.

The FDIC also sells real estate it ends up owning, and publishes its closed sales. Our watch page lists the most recent commercial ones; there are few of them lately, and they’re a rough guide, not a market index.

Before you bid on any of them

Run the deal through the underwriting calculator at the price you’d bid, not the minimum. Then check whether a loan is realistic with the financing pre-check. A property that looks cheap at auction can still be a bad buy if the loan you can get on it doesn’t cover.