I'm planning on attending my first tax deed foreclosure sale/auction in a couple of months in Seattle, WA (King County). Just wanted to see if anyone has been to this specific auction before, and what was your experience like?
Some general questions about tax sales:
I'm considering driving by all of the properties to check them out (after I narrow down the list online). Would you guys recommend that, or is that a waste of time? Do the majority of them not make it to the auction? If so, is it because investors are reaching out to them before the auction (and is that legal)?
To answer some of your general questions, we ALWAYS at least do a drive by of any property that we are willing to put a bid in on. We have come across many burned out houses, flood houses, landlocked lots (no road access) and places that were in such bad condition a good wind will bring them down. You cannot get all the information driving by but at least you can get an estimate to help you determine if you should even bid and if so, how much.
Past experience has shown that at least half of the houses get pulled. Some are for legal reasons or the owner paid the back taxes and some are probably other investors getting in touch with the owner and putting a deal together before the auction. Of the ones that make it to auction half are not worth bidding on and the remaining ones generally have no clear "owner" as the previous one passed away and had no direct heirs or will to give the house to.
The list is going to shrink rapidly in the weeks and especially days before the sale. People scramble around and find the money, or if their is a note the holder pays the back taxes. I'm sure there is some investor activity, but if considering that route be very careful. A bunch of local investors have gotten in trouble for that.
Also you need to check title on the properties you are interested in.
FWIW I've never bought a property at tax sale. It generates a crazy amount of interest for some reason and the few decent deals that do make it sale get bid way up.
Thanks for the response, guys!
I definitely plan on doing my due diligence, but I was afraid that most of the properties that are listed wouldn't make it to the auction, and the ones that do are bad deals. It sounds like the auction might not even be worth it?
Bryan, what do you mean by "getting in trouble"? Are you referring to the Distressed Homeowner Act? Would I be safe if I only plan on going after the properties that are non-owner occupied, or is there some other law out there that I should be wary of?
They are actually encourage you to do on site inspection (see under #8: An on-site inspection should also be made)
Also #9 stated that owners of valuable places will pay taxes most of the time (see under #9: Do not count on buying a house at the foreclosure auction. Normally, owners of improved properties subject to tax foreclosure will raise the money to redeem the property before the sale, often at the last minute.)
I do know some people who bought at King county tax sales and were able to money off of these properties. However, I also know a guy who purchased from a sale house for 12,000 but it also had 40,000 medial lien which he had to pay off prior to selling house.
So be careful and good luck. Next one is on Dec 12, 2014
Might be some related reading at this next link:
Also, if you are going to rehab make sure that you have a title company that will issue insurance on the property. Because there is a redemption period in washington state you may find it difficult to sell it because of the cloud on the title.
There is no redemption period in Washington unless owner was a minor or person deemed legally incompetent. In that case there is a 3 year redemption period.
I love that phrasing on the website.
There is no redemption period unless.... so, there is a redemption period. In my estimation, there is a higher likely hood of the title being in a trust, or an estate where the trustee can fulfill that requirement. Again, it has been years since I was at the trustee sale, but the title companies I talked to said they would not insure, and quoted the redemption possibility as one of those reasons.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing