Tax Deed Sale Help - Washington State
Hey All,
I'm just getting started with this strategy approach. Has anyone dealt or actively purchased any tax deed sale properties in the greater Seattle area. I'm gearing up for one, and I'm just curious to know how this works out.
Any tips? What are your thoughts?
Best,
James
Having been to many and not bought anything here is what was in a business proposition I wrote up two years ago:
The Company predicts that there are certain risks that accompany purchasing properties at the tax foreclosure auction. These risks can be managed and lessened by having a plan detailing how the company plans on dealing with them. These risks include:
The primary risk that presents itself at the auction is that targeted properties may have their back taxes paid off prior to the auction and remove the property from the auction. By evaluating every property on that is going to auction and preparing a plan of action for each property we reduce this risk to a very minimum. With such an expansive list and research from previous tax auctions, The Company believes that only half of those properties will actually go to auction.
The second risk that presents itself is a bidding war for an identified property which raises the price of the property beyond a profitable threshold. By researching previous tax foreclosure auctions The Company has identified certain bidding strategies that are employed at these auctions. By analyzing these strategies we have been able to identify the range that the bidding of a property should logically fall into. The Company has coupled this analysis with a formula to determine the profitability of the property at certain price points that we can expect to pay at the auction. This methodology will allow The Company the opportunity to evaluate the profitability of each property with each bid on the property. A bidding ceiling has been established for each property where the profitability of that property does not match the goals that The Company has identified.
The publish list is usually reduced by 1/2 to 1/4 of the original list on the day of. So you waste a ton of time researching what 200 properties?
Last time I was there 5 years ago there were about 200 people in attendance, and anything left on that list is probably going to an institutional buyer (you'll identify these guys pretty easily as the groups in suits and ties).
You must be able to pay cash.
Most homes that I investigated are not in prime rental areas.
Here's a couple of bullet data points for you too:
Previous Years AnalysisAverage Taxes Due:
The Average Taxes that were due on previous tax foreclosure properties minus commercial properties was $6,028. Dollars
Average Purchase Price:
The Average Purchase price of properties at tax foreclosure auctions minus commercial properties was $37,644.
Average Tax Assessed Value of Properties:
The average King County Assessed Value of properties that went for sale at previous tax foreclosure auctions minus the commercial properties was $102,014.
Average Paid versus Tax Assessed Value:
The average percentage of what properties were paid for versus what the King County Tax Assessor values the property at minus commercial properties was 0.462 which translates to 46¢ to the Dollar.
Average Paid versus Taxes Due:
The average percentage paid versus the taxes due at the King County Tax Assessor minus commercial properties was 610.2 percent.
Average Projected Bid Range at Tax Foreclosure Auction
The average projected bid range on the properties that went for sale at previous tax foreclosure auctions was: $30,620 - $42,846.
Median Taxes Due:
The Median Taxes that were due on previous tax foreclosure properties was $4,078.
Median Purchase Price:
The Median Purchase price of properties at tax foreclosure auctions s was $25,000.
Median Tax Assessed Value of Properties:
The average King County Assessed Value of properties that went for sale at previous tax foreclosure auctions was $61,000
Median Paid versus Tax Assessed Value:
The average percentage of what properties were paid for versus what the King County Tax Assessor values the property at minus commercial properties was 0.418 which translates to 42¢ to the Dollar.
Median Paid versus Taxes Due:
The average percentage paid versus the taxes due at the King County Tax Assessor minus commercial properties was 508 percent.
Median Projected Bid Range at Tax Foreclosure Auction
The average projected bid range on the properties that went for sale at previous tax foreclosure auctions minus the commercial properties was: $20,716 - $25,620.
Again though, this was from 2009
On the plus side it's a great place to network! And a fun day.
Troy, where was this data sourced from? I'm curious to know what that looks like within last 2 years since. Not that matters but, least it shows that this approach is still do-able. Any reason why you wouldn't go down this path to find a deal?
Personal Research from 2006-2009. Unfortunately I moved away to Las Vegas after 2009 auction and haven't been back.
I was thinking about heading out there this year, but I wouldn't have time or the boots on the ground to investigate the properties. If its even worth the time.
http://www.biggerpockets.com/forums/20/topics/1532...
For a recent post on topic
Might be some related reading at this next link:
On May 20, 2015, I purchased a property at the City of Worcester tax deed sale for $31,000 and received a tax collector’s deed subject to 6 month right of redemption, property value $700,000. Three months after purchase, August 11, 2015 former owner James Levin files chapter 11 bankruptcy to sell property free and clear of all liens to a straw buyer Peter Heaney. There are $650,000 secured liens including $100,000 of property taxes. Bankruptcy judge fraudulently allows sale free and clear of all liens under purportedly 363(f) for $130,000 to a straw partner. Photos show Levin at property March 30, 2016. I filed petition in Land Court after six month redemption expired. After all parties served, April 28, 2016, bankruptcy attorney for the straw buyer filed motion in Land Court to dismiss tax lien case. Judge dismisses my tax deed case without former owner redeeming, purchasing the property back by paying the back taxes. The debtor filed chapter 7 bankruptcy, the “buyer” was not an interested party, just someone interested in purchasing the property. The sale did not comply with any of the 3rd five requirements. The title was in my name at the time bankruptcy filed.
What are my options if any?
The property was fraudulently sold at a fraudulent bankruptcy sale to a straw, I received nothing.
The bankruptcy lawyer for the straw buyer asked to have my tax deed case dismissed because he claimed property was sold at bankruptcy hearing. Despite my opposition in bankruptcy and Land Court, Judge Foster dismissed my tax deed case. I am out $35,500. Land court’s own documents state Land Court rules in favor of municipality unless the former owner finally pays the taxes. The “buyer” had no interest in the property, not a mortgagee, a lien holder, former owner, absolutely no interest. Former owner filed chapter 7 bankruptcy. Judge Foster ruling contradiction to law and his online interview with Attorney Lucy Rivera. https://vimeo.com/115307836
From Massachusetts Land Court Guide 2015.
Land court chief title examiner must approve all bankruptcy instruments. Objections or appeals filed void any bankruptcy sale. Illegal for Bankruptcy court to discharge $100,000 of property taxes. Bankruptcy instruments must be approved by Land Court. Judge Foster was wrong stating he can’t reverse bankruptcy ruling. Land court has exclusive jurisdiction regarding real estate title. It is his job, his obligation, to veto an illegal ruling in bankruptcy court related to title. Judge Foster was wrong stating he can not reverse the incorrect ruling. Judge Foster was wrong stating my tax deed case should be in bankruptcy court. Judge Foster was wrong stating 362(b), exceptions to 362(a), automatic stay, including 362(b)3 did not apply. Judge Foster was wrong , automatic stay does nothing to time periods and deadlines, which are governed by 11 USC 108(b), Extension of Time. Automatic stay stops bill collectors from calling, however does nothing regarding deadlines. Judge Foster was wrong stating federal laws wipe out Massachusetts laws, which is not true. Judge Foster was wrong when stated Massachusetts laws MGL chapter 60 don’t apply when there is a bankruptcy. Massachusetts Land Court examiner attorney John Harrington stated this is the first time in his twenty eight years property taxes not paid and tax lien case dismissed in Land Court, and a bankruptcy judge allowed a debtor to sell a property they don’t own and don’t have title to.
From Massachusetts Land Court Guide 2015
Chief Title Examiner approval required.
On May 20, 2015, I purchased a property at the City of Worcester tax deed sale for $31,000 and received a tax collector’s deed subject to 6 month right of redemption, property value $700,000. Three months after purchase, August 11, 2015 former owner James Levin files chapter 11 bankruptcy to sell property free and clear of all liens to a straw buyer Peter Heaney. There are $650,000 secured liens including $100,000 of property taxes. Bankruptcy judge fraudulently allows sale free and clear of all liens under purportedly 363(f) for $130,000 to a straw partner. Photos show Levin at property March 30, 2016. I filed petition in Land Court after six month redemption expired. After all parties served, April 28, 2016, bankruptcy attorney for the straw buyer filed motion in Land Court to dismiss tax lien case. Judge dismisses my tax deed case without former owner redeeming, purchasing the property back by paying the back taxes. The debtor filed chapter 7 bankruptcy, the “buyer” was not an interested party, just someone interested in purchasing the property. The sale did not comply with any of the 3rd five requirements. The title was in my name at the time bankruptcy filed.
What are my options if any?
The property was fraudulently sold at a fraudulent bankruptcy sale to a straw, I received nothing.
The bankruptcy lawyer for the straw buyer asked to have my tax deed case dismissed because he claimed property was sold at bankruptcy hearing. Despite my opposition in bankruptcy and Land Court, Judge Foster dismissed my tax deed case. I am out $35,500. Land court’s own documents state Land Court rules in favor of municipality unless the former owner finally pays the taxes. The “buyer” had no interest in the property, not a mortgagee, a lien holder, former owner, absolutely no interest. Former owner filed chapter 7 bankruptcy. Judge Foster ruling contradiction to law and his online interview with Attorney Lucy Rivera. https://vimeo.com/115307836
From Massachusetts Land Court Guide 2015.
Land court chief title examiner must approve all bankruptcy instruments. Objections or appeals filed void any bankruptcy sale. Illegal for Bankruptcy court to discharge $100,000 of property taxes. Bankruptcy instruments must be approved by Land Court. Judge Foster was wrong stating he can’t reverse bankruptcy ruling. Land court has exclusive jurisdiction regarding real estate title. It is his job, his obligation, to veto an illegal ruling in bankruptcy court related to title. Judge Foster was wrong stating he can not reverse the incorrect ruling. Judge Foster was wrong stating my tax deed case should be in bankruptcy court. Judge Foster was wrong stating 362(b), exceptions to 362(a), automatic stay, including 362(b)3 did not apply. Judge Foster was wrong , automatic stay does nothing to time periods and deadlines, which are governed by 11 USC 108(b), Extension of Time. Automatic stay stops bill collectors from calling, however does nothing regarding deadlines. Judge Foster was wrong stating federal laws wipe out Massachusetts laws, which is not true. Judge Foster was wrong when stated Massachusetts laws MGL chapter 60 don’t apply when there is a bankruptcy. Massachusetts Land Court examiner attorney John Harrington stated this is the first time in his twenty eight years property taxes not paid and tax lien case dismissed in Land Court, and a bankruptcy judge allowed a debtor to sell a property they don’t own and don’t have title to.
From Massachusetts Land Court Guide 2015
Chief Title Examiner approval required.
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#2 All Forums Contributor
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@Gene Lamento remind me never to operate in that state... there are no gurantee's on tax sale and foreclosres as you just learned.
Hi Jay,
Unfortunately corruption exists and I am hoping someone can suggest how to deal with corrupt judges. Thank you for your thoughts.
#2 All Forums Contributor
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#2 All Forums Contributor
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@Gene Lamento you will find bankruptcy judges have huge latitude and are the most powerful of all judges.. talk to the FBI
James,
The Snohomish tax deed auction is in person up in Everett. Last year they had a vote by everyone there whether to have it online or offline in 2016 and everyone voted offline (because they don't want more competition). The Pierce and King county are held online.
There maybe 1 or 2 deals at a tax deed auction.
You go to the auction and they give you a list of properties. They put the tax parcels up on an overhead. You should bring cashier's checks in different amounts like $1,000, $2,500, etc. They mail to you whatever the extra amount is.
The best strategy at the tax deed auction is raw land. Not many people are interested or know how to determine whether the raw land is worth. I take a different approach. Because I am a land developer, a common obstacle I run into is removing dirt from construction sites affordable. At the tax deed auction, I look for raw land that I can basically use as a dirt dump site for myself. Then I'll run a craigslist ad to anyone who wants free dirt within 5 miles and then use my tax deed auction land to dump what's left.
I am sure people think I am crazy at the auction buying land that has no buildable value.
@Gene Lamento that's terrible. You'd think you'd at least be reimbursed for the purchase price.
Thank you Christine,
I will file an appeal this week in Land Court however because of corruption it most likely won't make any difference. The former owner who didn't pay his taxes has been given three million dollars from corrupt city officials.
I appreciate this is a real estate investing forum ando just wanted to share my experience. I will continue to purchase tax deeds in other states, just be careful.
@Ryland Taniguchi I have a question - are properties sold at Tax Deed Auction free and clear of liens? Which liens survive the foreclosure?
@Hussein Madkour In NH all other liens are wiped out by the tax deed. The lienholder needed to address it prior to that point (in NH tax deeds are done after 3 years of tax liens).
Originally posted by @Troy Fisher:Personal Research from 2006-2009. Unfortunately I moved away to Las Vegas after 2009 auction and haven't been back.
I was thinking about heading out there this year, but I wouldn't have time or the boots on the ground to investigate the properties. If its even worth the time.
A follow up question to Troy Fisher's comments from two years ago. Is there a place where I can find property transaction record of past tax foreclosure auctions at King County?