Tax Auction Sale Probabilities
Hi- my first posting here, just invetigating potentialities and trying to understand how it works.
I got a copy of the 2005 Tax Defaulted Property Sale listing. I checked this against the supplemental list which lists the remaining properties. Going over the list of these still available properties, I had found quite a few single and multi family residences that interested me.
Curious about my actual chances to buy something. I went to the final listing from the previous year.
Where all of the homes/apts.? Almost every listing was vacant land, or commercial/industrial. Certainly not the same ratio as the current list for the auction in Feb. Did someone swoop in and pick all of the houses before they made it to the auction?
Trying to understand if it is possible or common for someone (a fixer?) with the savvy-ness who can do this, and if so, how?
Of course my assumption might be wrong.
What you can find at tax sales ebbs and flows. Maybe last year an investor cherry picked the list and was able to buy out the interest of owners whose homes were about to forfeit. Maybe the owners got wise and paid the taxes, Maybe both. I've bought numerous tax sale properties, from already occupied apartment buildings to vacant rural lots. Don't discount the vacant lots. Some could be gold mines, esp. if you think creatively about what you could do with them. Surf this site using the advanced search function and you'll find lots of ideas.
Remember you need to bring cash to the sale or, possibly, a personal check. Ask for the rules where you are. It's tough to pull cash out of anything you buy until the title quiets down a little. You only get a state deed, essentially a quit claim deed, not usually something banks will lend on right away.
You're doing the right thing by asking around. Ask your county's people lots of questions, make them your allies. If the property is only tax delinquent--ask your treasurer about getting a list of those, it's a different list from the forfeiture list and may cost you something-- you'll have a better chance of a deal by contacting those owners yourself. Do they know they're at risk of losing their home? Do they care?
Most will be vacant, out of town, etc. and you might need to work to sniff them out. Some will be dead, with estates in probate or beyond it, where no one wanted the property. If you can track them down, offer them a token sum--I use $50--for a quit claim deed so you can move into their shoes and redeem the property before the sale. Make sure and get it recorded and pay the taxes fast before it goes to forfeiture. In my state, once the land is actually forfeited there are no more redemption rights, so if you see the property listed as soon-to-forfeit, make sure you make and record your deal before the deadline. I bought two nice lots once for $50, but the owner dragged her feet on sending back the quit claim deed and I lost the race to the courthouse, ended up wasting my fifty bucks because the date for the forfeiture passed while I was waiting. The property sold for over ten thousand at the sale.. Sigh.
When you propose a deal to a delinquent owner, you need to make it as easy as possible for them to say yes. Tell them you'll take care of all back taxes, so they'll never have to worry about being responsible for the property again, and their credit won't be affected (which won't happen anyway, but it sounds good). Just make sure you want the property, cos you get it warts and all. It may have unpaid mortgages (though they should have foreclosed themselves long before the forfeiture) or mechanics liens, IRS judgement liens, etc. The messier it is, the greater your risk (but the better your chances of getting it).
My best deals have come in counties without an online presence, where you need to do the actual courthouse research. I usually drive around and visit all the properties. There are gurus out there who tell stories of the old days when deals abounded. They're still out there, just getting harder to find. Work for them, and you'll be rewarded.
I got long-winded because I like tax sales. Not exactly the "No Money Down, Cash Back at Closing!" deals many others pursue (me too), but good fun. My brother in law in another state always uses credit card cash advances to pay for his buys, and he never loses money on anything.
And you never know what will happen. I've seen property sell for twice its retail value. I've gotten some great deals at a dime on the dollar. And that's just in the past year. Sometimes lots of people show up and nobody bids. Sometimes only a few show up and bid up the prices like crazy. Lately, there's been more interest in general. Like any auction, have a strategy. If the bidding seems way too low, I like overbidding the auctioneer's bid to psyche out the competition; e.g., the bidding has been going 100, 110, 120, 130, and I'll just bid 250 or 300. Catches people off guard. Can't use it too much though.
Good to have a max price (write it down, too!) so you don't get caught up in the excitement and pay too much. I bought a canoe like that at an auction the other day. But I digress...
Yeah, call all the assessors/auditors in your area and at least get on their mailing lists. If they don't have a mailing list and aren't online, pay especially close attention. The harder it is to get info, the better the chance you'll get good deals. Go to all the auctions you can, even if you're broke that day. Don't be disillusioned if it takes awhile to get a bargain. The word is out.