Simulation: a fictional property for practice.

An IRS sale with a deposit now and the rest later

The notice lets you pay 20% at the sale and the rest within 30 days. Your loan isn’t approved yet. What could go wrong?

A fictional house at an IRS sale of seized real estate. Federal rules apply in every state (26 U.S.C. 6335).

• Sale: IRS sale of seized real estate
• Minimum bid: $95,000
• Terms in the notice (example): 20% at the sale, the balance within 30 days
• Your plan: Bid up to $140,000 and borrow the balance from a private lender

Mission 1: What can you pay with?

Pick everything the IRS accepts at a sale.

• Cash
• A certified, cashier’s or treasurer’s check
• A U.S. postal, bank or express money order
• A personal check, with the rest wired later

The law lets the IRS defer part of the price for no more than 1 month. The notice sets the actual terms (26 U.S.C. 6335(e)).

Mission 2: Your lender backs out on day 25

If you can’t pay the balance on time, what can happen?

• The IRS can sue for the unpaid balance with 6% interest, or void the sale, resell the property and keep what I paid
• I get my deposit back and the IRS moves on

Have the full price ready, in cash or with a loan that’s already approved in writing, before you bid.

Your loan isn’t approved. Do you bid?

Buy, investigate or pass? Work through the drill to see what an experienced investor would weigh.