Auction Guides: Not So Hot Properties
Seized
Cars from $500
and
Foreclosed Homes
from $3000
No Money Down! |
Ads like these in newspapers and magazines,
on television and the Internet, and in coupon mailings
to your home may sound like the ticket to your dream
home or car. They offer the chance to buy a big ticket
item at auction - for well below its market value. What
deals! Just call the toll-free number for more information.
Is there a
catch? You bet!
Don't Be
Mis-Guided
If you respond, you're likely to hear pitches for guides
to cars and homes being sold in your area at great prices.
But the guides aren't always what they're promised to
be. And if you buy one, you may end up spending more
than you planned.
You'll be charged about $50 for each
guide, either to your credit card or through a withdrawal
from your checking account. You may even be billed for
a guide you didn't order.
Here's how it happens: When you place
an order, the salesperson might offer to include another
guide as well. What you won't be told is that you'll
be charged for the second guide, even though you never
agreed to buy it.
In many cases, the businesses bill
your credit card or debit your checking account even
if you never agreed to buy anything. They get your bank
account or credit card information under false pretenses,
sometimes claiming that they need the account number
to verify your credit history or to "hold"
your order.
And when auction guides arrive in
the mail, chances are that they contain far less information
than you expected. Actually, it's information that is
readily available elsewhere for free.
The bottom line: While it's possible
to buy cars at auction and homes through foreclosure
sales, you won't find the "deals" advertised
in auction guides sold by fraudulent promoters.
Auto Auctions
Despite claims to the contrary, the auto auction guides
these companies sell don't contain specific information
about dates and locations of auto auctions or lists
of available cars. Rather, they contain general information
about auto auctions and addresses and phone numbers
- all of which are available in your phone book. You'll
still need to call for details about upcoming auctions.
And, despite what you might hear about
auction guides or see in the ads, cars at auction typically
sell for their fair market value. These auctions attract
a variety of buyers, including used car dealers, so
the bidding can get competitive. At many government
sales, the items are appraised before the sale and won't
be sold if the bidding runs too low. Indeed, it's rare
to find high-end or late model vehicles for sale, especially
at "bargain basement" prices. And the truth
be told, the cars that sell for $500 or less usually
are damaged or junk vehicles purchased for scrap.
Foreclosed
Homes
The same goes for foreclosed homes. Most well-maintained
homes sell for close to their appraised value. The houses
that sell for significantly lower prices often are in
disrepair or in unstable communities.
In addition, foreclosed homes are
sold "as is." They don't come with warranties,
and sellers aren't required to disclose any problems.
Buyers, particularly those who don't pay for a professional
home inspector before closing on the deal, may find
themselves mired in unanticipated repair bills.
Not Proprietary
Information
Auction guide companies aren't the only ones with access
to information about federal government sales programs.
In fact, the information is available free or at a low
cost from the government. Some agencies maintain mailing
lists to notify people about upcoming sales. They may
charge a subscription fee to maintain the list and cover
their mailing costs.
Information about foreclosure sales
also is available online, through the Multiple Listing
Service, a database used by real estate agents, and
through newspapers and other publications.
The classified or business sections
of national or local newspapers often publish information
about upcoming sales. In addition, trade papers like
Commerce Business Daily occasionally publish information
on sales programs. Your local library or Chamber of
Commerce may maintain subscriptions for public use.
Some government sales programs also
advertise on local radio and television. Or you may
see notices posted at post offices, town halls and other
government buildings. You also might want to contact
individual government agencies and affiliates about
their sales programs. Look for listings in your phone
book under "U.S. Government," or check out
these websites:
The Best
Defense
If you respond to an ad for auction guide:
- Avoid giving your bank account or credit card number
to a company representative who says it's necessary
for verification or credit.
- Recognize that seized vehicles often are sold at
government auctions, but rarely at the bargain prices
quoted in some ads. Expect to pay what the vehicle
is worth and to compete against other bidders, included
used car dealers.
- Be aware that foreclosed homes often are sold for
slightly less than their appraised values, but may
require substantial repairs.
- Recognize that the auction guide company isn't the
only source for the information you want. Contact
individual government agencies for information about
their sales programs. Ask to be put on a mailing list
to be notified of upcoming sales. Some government
sales programs advertise in the media, on the Internet
or through postings in government buildings.
- Get the name and location of the company and check
it out with the local Better Business Bureau or state
Attorney General.
- Get a written copy of the return policy before you
pay for an auction guide or list of foreclosed homes.
Some fraudulent sellers of auction guides give consumers
the impression that refunds are no problem. But often,
the businesses put so many conditions on refunds that
few consumers ever get them.
- Use your credit card to pay for an auction guide.
It offers more protections than other payment methods
if you have a problem with the purchase.
For More
Information
The federal Consumer Information Center (1-888-8-PUEBLO)
has several publications about government property sales:
- U.S. Real Property Sales List. 5 pp. (Bimonthly.
GSA) Item #517G. Free.
- Guide to Federal Government Sales. 19 pp.
(1998. GSA) Item #111G. $2.00.
- National Sellers List. 8 pp. (1999. DOJ)
Item #321G. $.50.
- How You Can Buy Used Federal Personal Property.
5 pp. (1998. GSA) Item #319G. $.50.
Where to
Complain
If you believe you have been victimized by fraudulent
auction guide promotions, contact your local postmaster
or the U.S. Postal Inspection Service by phone, toll-free:
1-888-877-7644; by email at: www.uspsoig.gov;
or by mail at: U.S. Postal Inspection Service; Office
of Inspector General; Operations Support Group; 222
S. Riverside Plaza, Suite 1250; Chicago, IL 60606-6100.
Other organizations that investigate
fraud include your state Attorney General, state and
local consumer protection offices or your local Better
Business Bureau.
June 2000
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