ant to buy a Porsche for $100? An Army Jeep for $300? How about a drug lord's seized yacht for $1,000? If you believe that, there's some oceanfront Arizona property up for bid, too. Government auctions always have been the stuff of legend. The tales of luxury items sold at bargain-basement prices seem too good to be true—because they are. "People have this big misperception that government auctions have a lot of luxury goods available and that these things sell for a song," says C. Steven Baker, director of the Federal Trade Commission's Midwest Regional Office in Chicago. "But for the most part that's not true. Government auctions aren't much different from any other kind of auction." While most items up for bid are neither glamorous nor a "steal," government auctions still offer some good deals for savvy shoppers. If you learn the terms of sale, research the items you'd like to bid on, and set realistic expectations for and limits on the price you'll pay, you can walk away a winner when the auctioneer pounds the gavel and yells, "Sold!"

Links      Buyer beware

Each government agency runs its auctions differently. Take advantage of the auction's inspection period.

A cabinet full of auctions More than a dozen federal government agencies hold auctions at sites across the country; the items for sale vary accordingly. The Defense Department clears out old army tents, military clothing, and scrap parts. The U.S. Postal Service auctions off unclaimed packages. The Treasury Department, which includes the U.S. Customs Service, sells a bizarre variety of goods: imported toys and clothing, cars and boats, even huge lots of food and toilet paper. While many of these government divisions sell their own goods, two agencies serve as clearinghouses for other departments. The United States Marshals Service sells property confiscated by the Justice Department and its bureaus. Among the 15,000 items the Marshals Service sells annually are some of the marquee luxury items people seem to expect at government auctions: jewelry, boats, cars, art, and antiques. The General Services Administration (GSA) sells off the common, everyday items that government agencies no longer need: office equipment and furniture, tools, fleet vehicles, cameras, projectors, and the like. The GSA's Federal Supply Service gathers the used wares from all but military agencies of the government and runs the auctions. In addition, state and local governments often sell their surplus at auction. These forums may offer a smaller selection of merchandise, but the crowds usually are smaller and the atmosphere more genial. "Local auctions are a little more hands-on and a little more friendly," says Ellen Hughes, author of "Government Auctions/Sales Manual" (ISBN 0964590840). "At local auctions, you can get to know more about the history of the property for sale." Most of these agencies maintain Web sites with free detailed information about their particular sales programs. Nevertheless, because the information is spread among various sites, some consumers instead choose to subscribe, for a fee, to commercial Web sites that compile auction data and dates for them.

Learning the fine print Each government agency runs its auctions differently. To know what you're in for, call or look online for the following "terms of sale": Accepted forms of payment. Will the auction accept credit cards, or must you pay in verifiable funds such as cash or money orders? Documentation. Most sales require you to bring a photo ID. If you plan to pay by check, the auction may require a letter of guarantee from your credit union or bank. Also, if you're buying for a nonprofit organization, you'll need to bring your tax-exempt number. Sales method. Will this be a public auction with verbal bidding, or is this sale accepting sealed bids? Some sales won't negotiate on price; instead they offer items on a fixed-price, first-come, first-served basis. Condition of items. Most auctions sell items "as is"; they do not guarantee the condition of any items they sell. Removal of items. Called the "where is" clause, most auctions require buyers to remove their purchase from the premises immediately. The government agency may charge a storage fee or cancel the sale if you leave your merchandise behind for later pickup. Special conditions. Some auctions place specific restrictions on sold items. For example, real estate sold at government auctions may come with myriad zoning requirements. Also, the U.S. Customs Service does not allow some of its auction items to remain in the U.S. If you buy, say, some knock-off Nikes or a car that doesn't meet emissions standards, you must export those goods to another country. "You have to be prepared," says Hans Anderson, founder of Government Auction Listings, an online guide to government auctions. "Some things you need to know in advance; otherwise, you may not be able to bid on the items you want."

The      $100 Porsche      is an urban legend.      Feverish bidding       is a common      affliction at      government auctions.

Inspecting the goods To ensure you're not bidding on a pig in a poke, take advantage of an auction's inspection period. Ranging from a few hours to a few days, these sneak previews allow you to kick the tires, look under the hood, and take a closer look at the items up for bid before they're put on the auction block. "The preview period is of utmost importance," says Dan DeArmond, a veteran auctiongoer in Amarillo, Texas. "If you don't get to preview, don't bid. The preview is where the work is done and the decision to buy or not to buy is made." The inspection period provides you with time to comparison shop. Whether it's a used car or VCR you're eyeing, write down the model, serial number, and other salient details. Then, hit the books or the mall to gauge the item's true worth. Go to an electronics superstore or pick up Consumer Reports to see what a new VCR costs. Inventory what you already own; is this new piece of equipment compatible? Check out a Kelley Blue Book or search the Internet for used-car values or ask a lending officer at your credit union about a used car's value. And while you're online, check the Web site for the government agency sponsoring the auction. Some agencies, like the Treasury Department, list bid results for previous auctions.

Going once, going twice According to the GSA's Guide to Federal Government Sales, most auction items usually sell at close to fair market value. "Prices depend on the auction and the crowd," says Kevin Brown, a veteran auctiongoer from Glendale, Calif. "They're usually never more than half off. The norm is probably 20% less than retail or street value." Agencies may appraise items beforehand and set a "reserve price," or minimum bid. If the bidding never reaches that set amount, the auctioneer can discontinue that particular sale. The GSA's Guide to Federal Government Sales recommends watching a few auctions before making your first bid to get a feel for the auction process. Once you're ready to jump in, be aware that feverish bidding is a common affliction. "Know what you're getting, how much it's worth, and how much you're willing to spend on it," says Anderson. "In the heat of the auction, it's easy to keep bidding and go over what you wanted to spend." The remedy is to stay calm. Commit your dollar limit to paper, keep it in front of you, and stick to it. Keep track of the bidding to make sure you're chasing the right item. And remember that life won't come to an end if you don't get those Army fatigues or that obsolete computer. "Don't be afraid to come away empty-handed," says Brown. After all, buying for the sake of buying defeats the purpose. Be prepared; take your time. By being patient in your bidding and smart about your purchases, you're more likely to walk away from government auctions with items—and knowledge—that will serve you well down the road.

Find out the      terms of sale      before attending      an auction.

Links Federal Trade Commission FTC's Not So Hot Properties Treasury Department Bid results U.S. Customs Service Defense Department U.S. Marshals Service General Services Administration (GSA) GSA's Guide to Federal Government Sales "at sites across the country" lists the locations of GSA auctions around the country Hans Anderson's Government Auction Listings

Buyer beware You've probably seen the ads: Insider tips to government auctions! Deals for pennies on the dollar! Send $100 for your auction guide now! Such ads have raised the ire of the Federal Trade Commission (FTC). In November 1998, the FTC launched Operation Auction Guide and charged six California companies offering such guides with deceptive marketing practices. Not only did the companies allegedly make fraudulent claims about the availability of the touted deals, but they shipped additional, unrequested guides and charged customers without permission. If you have a complaint or inquiry about these auction guides, call the FTC's Consumer Response Center at 877-FTC-HELP (382-4357) or log on to the agency's Web site. There you can file a complaint or read the news alert "Auction Guides: Not So Hot Properties."

©1999 Credit Union National Association Inc.