In Taiwan, when a site owned by governments is put for sales through a sealed-bid public auction, it has to be valued by qualified professionals, and the market value of this site be used as the reserve price. This mechanism is to ensure the government-owned properties not to be sold under the market or fair price. However, the auctioned prices are constantly criticized as being far below the market values. This criticism is particularly popular in a booming property market. The builders are also thought to often make a superabundant profit due to the undervalued land. This study analyses 41 sites that were auctioned between 1999 and 2007 at Kaohsiung City, Taiwan. All these sites were already developed into either single-family houses or condominiums when this study was undertaken. Given the sale prices of houses and condominiums are known, we are able to employ land residual method to estimate restrospectively the market value at the time when the sites were auctioned. We then compare the retrospective market values with the previous auctioned prices so as to determine whether the builders purchased those sites cheap as commonly alleged. The empirical results suggest that the auctioned prices of 24 sites (59%) are significantly lower than the ex post estimated market value. And the auctioned prices of the rest of 17 sites (41%) are not found to be lower than the ex post estimated market market. In conclusion, some builders indeed purchased sites at a cheaper price from public auctions, and make profits not only from building activities but also from the price difference in land. However, this conclusion is based on a retrospective view as the builders would not know for sure what the property market and housing prices would become in the future. This uncertainty represents a risk that shall also be reflected in price.