The Importance of Due Diligence

Due diligence is very important to being successful in any Real Estate transaction. This is why all investors will tell you that completing your research on the property (Due Diligence) is rule number one! Tax deed Auctions do not offer any exceptions to this in any way shape or form. 

Today while at work (my 8-5); a man came in, who attended a tax deed auction recently. He was very upset that the information that was provided prior to the sale indicated a property contained a mobile home. From my years working in a tax office in Texas, the one thing I learned is that mobile home just move without warning. I don't mean they get up and walk away move. What I mean, is that people will relocate them for any reason. 

So, this man comes in asking for a refund on his bid for this property, that supposedly contained a mobile home. He was told no of course. But what makes this such a teachable moment, the man refused to accept this for an answer. He wanted to talk to the attorneys, the constable who conducted the sale, and the Tax Assessor Collector all at the same time, to plead his case. Needless to say he did get to talk to the TAC, who rightly apologized for the inconvenience, but informed the man that no one can justify refunding a voluntary payment to someone who did not go and view the property in question. 

The man was visibly upset by this point. But in all honesty, the TAC is right. In Texas Tax Deed Sales, everything is sold As-Is buyer beware. It is the responsibility of the bidder to do their homework. When a law firm has the obligation to provide services to 100 counties, with over 1000 properties listed each month; there is no way they can verify every detail about a property. His departing words were "I will see you in court."

It is unfortunate that the man took everything for granted. That he would get something that would be to good to be true, for him. As, I looked into the records, he bid and paid the minimum bid for the property. The good news, it was only $12,000; the bad news, the land value is only $2,500 and improvement value was $30,000. I guess it is going to be a $9500 lesson in the need to verify all data on a property before you attempt to purchase. A simple drive by the property would have revealed to the man that there wasn't a mobile home on the lot.

Since the TAC of a county with 50,000 or more residents duties are separated from the actual Appraisal District, the TAC did not have any previous knowledge of the mobile home being moved. Since the appraisal district failed to notify the TAC office of the changes, the TAC has zero liability in the mans claim. Hopefully, before he files his lawsuit, he learned to perform his due diligence in the law. Otherwise, it will be another waste of money, and time for him.