In its rush to balance the budget by selling off some of the family treasures, the District government once again has flunked Business 101.

Who but the D.C. government would sit on millions of dollars worth of real estate for 100 years, then try to sell it in 60 days?

Where but the D.C. council chambers could anyone decide to sell when nobody is buying?

What was the council thinking when it demanded cash on the barrelhead while real estate brokers were giving away cars, cash rebates and cut-rate loans to move property?

What the council was worried about obviously was red ink. By selling 17 empty schools, abandoned fire stations, by-passed precinct houses, gutted garages and plain old vacant lots, the city figured to pick up $9.3 million in cash just before its fiscal year ends Sept. 30.

Fortunately, it didn't work. Instead of bids, last week's auction of the Corcoran School and Georgetown Incinerator drew yawns, giggles and silence.

Embarrassing! But probably just as well. In today's real estate market the city cannot hope to get the best price for its property. The only thing worse than not selling the property would be selling it too cheap.

That still could happen when the sales resume today with an auction of the Georgetown fire station on M Street NW, the parking lot at 13th and N streets NW, and a vacant lot on Church Street NW.

Jean Oliver, the city official stuck with this sales job, said Friday that several prospective buyers have posted deposits on the fire station and parking lot and plan to be at the District Building to bid.

The city has set minimum bids on all the properties -- unrealistically high minimums, some bidders claimed last week -- but in a normal real estate market the auction minimums would be nothing more than an ante to get the action going.

This is not a normal real estate market, as everyone but the city council seems to understand. Sellers are routinely chopping thousands of dollars off the asking price of houses just to get rid of them.

The District doesn't have to do that. There's no need for a fire sale, now that the opportunity to balance the budget has been blown.

It's time for the council to assess what went wrong and plan for a new sale that will both maximize the city's profit and assure the best possible use of the surplus land.

That doesn't necessarily mean auctioning it off to the highest bidder. And it certainly doesn't mean calling a quick sale and giving the buyer only 60 days to close the deal, as the city is now doing.

It's difficult enough to process a home mortgage application in two months when the financial markets are in such disarray, and virtually impossible to line up the complicated financing for a major commercial project when you're under the gun.

The rush to unload the property in what Mayor Marion Barry called "an economic development strategy" turned out to be an uneconomic strategy for development. The city's quicky sale schedule made it impossible for developers to study what they might do with the land; with no time for feasibility studies, it wasn't possible to calculate what the property was worth, let alone persuade a financier to put up the money.

If it's legally possible, the council might consider doing what many people trying to sell houses are being forced to do -- offer owner financing, taking back a mortgage from the buyer, if only a short-term one. Rather than sell the properties, the council might do better to offer a long-term lease, assuring the District of a flow of income at today's high rates.

Instead of an auction, the city should consider following the procedures of its own Redevelopment Land Agency when it disposes of urban renewal property or the Pennsylvania Avenue Development Corp. when it offers land on the avenue.

RLA and PADC don't just ask for bids, they seek proposals for utilization of a site, specifiying in advance what they want on it and working with the prospective buyers to get it.

Despite the mayor's mouthings about gearing the land sale to maximize economic development, there's plenty of evidence the city didn't think much about what would be done with the properties.

The descriptive material on the Georgetown firehouse, for example, suggests a chancery as one potential use. What nation would want its embassy offices in the midst of Georgetown? Disneyland? That idea makes about as much sense as turning the incinerator into a disco and dinner theater, an idea district officials were pursuing before the budget-balancing idea struck them.

Since the city is going to have to try again on the incinerator and Corcoran School, those two properties ought to be redeveloped like RLA and PADC projects. Specifying what must be built on those two sites would remove some of the uncertainty that discouraged developers from bidding on them last week.

Anybody who plans major development on either site can count on getting sued by the self-proclaimed protectors of Georgetown's esthetic purity. An incinerator buyer also may face delays due to a lawsuit from the disco entrepreneur who claims the city reneged on its promise to lease the building to him.

One developer suggested half seriously that he would have bid on both of those properties if the city would have agreed to wait for its money until the day he got his building permit.

Instead of simply auctioning the land and letting the successful bidder fight with Georgetown's Tories in tennis shoes, the council ought to make a decision now about the best uses of the incinerator, the school and any other sites left over after this week's auction, then start all over again.