The IRS lists property it has seized and is offering for sale on its Web site.

Generally, there are fewer than 100 properties at any given time, and they are scattered across the country. The terms for each piece vary, but the IRS usually wants a 20 percent deposit with your bid and all cash at the time of the sale. Cash means cash, certified check, cashier’s check, or some similar form of payment. The bidding procedures also vary somewhat, but they arc outlined for each property. When you click on the notice, you are told whom to contact, the bidding procedure, and photos of the real estate are given.

Because this property has been seized, it is not strictly in the same cate¬gory’ as other REOs,. Here are the basic terms of property- offered by the IRS.
Title
The property is offered “as is” and “where is,” which essentially mean that you take it with no right to rescind the purchase agreement later if you find that the property was not what you anticipated. The IRS offers no assur¬ance as to the fitness of the property for any use.

The IRS will offer title to the property. However, it may not be clear title. When it takes a property, the IRS effectively wipes out any junior liens—that is, any liens placed on the property after the seizure. However, it does not necessarily affect any legitimate superior liens and mortgages— that is, those placed on the property prior to the seizure. For example, the property could be subject to a first, second, or other mortgage. The IRS will provide what information it has on these prior liens, but you’re warned to check the title yourself.
Redemption Period
Unlike most REOs. IRS property has a redemption period. This means that after the sale, the former owners or their heirs, executors or adminis¬trators, or any other person who had a lien or interest on the property has 180 days to redeem it. This right of redemption means they can demand and receive title back to the property you bought.

At first glance this may seem like a good reason not to buy IRS property, but it actually can be a plus. The reason is that to redeem it, the person who wants it back must pay you, the purchaser, your full price plus 20 percent interest per annum. In other words, if your property gets redeemed, you receive a payment of 20 percent a year for your troubles.

TIP

Many people buy IRS property in the hope that it will be redeemed. They are more interested in the 20 percent re¬demption payment than in reselling.

TRAP

You will not want to spend any money fixing up the property during the redemption period, as that money could be wasted if it is eventually redeemed. You may also find it difficult to resell the property during the redemption period.

There are investors who make their living bidding and buying IRS seized property. You too may want to join their ranks. However, keep in mind that because of the nature of the title given and the redemption period, this is not like buying most other types of REOs. You should study the properties to make sure that you’re not paying too much and that it’s actually a bargain. And you should study the IRS procedure so that you truly understand what you are getting yourself into.