House I offered on is going to tax auction

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House I offered on is going to tax auction

Kellie Alkayam
Rental Property Investor · Golden, CO · Member since 2017 · 27 posts · 11 votes

I made an offer on a house in California. The seller has a lot of health issues, which have delayed negotiations, but we have verbally agreed to a price, and I am waiting for their signature. I was just browsing the California tax auction parcel number list in preparation for the upcoming auction, and stumbled upon this particular house. The sellers owe over $8000 in property taxes, and the house will be hitting the auction in May.

I already feel the house is a good deal, and the numbers make sense for my purposes. I know there's no guarantee I will win the house at auction, and I'd like to keep them from losing the house altogether. If you were in this situation, would you just let the seller know that you see that the house is about to go to tax auction, and try to close on it as quickly as you can? Would you try to negotiate for a lower price? I want to do the right thing for my business, but I also want to do the right thing for the sellers, so I'd love to know how others would handle the situation. 

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Bruce Lynn
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
7y

If you have a nice deal that you're happy with, then get them to sign and get it closed before the tax auction.  Sounds like you are the only deal in town right now.   If it goes to auction, then you may have lots and lots of bidders who want to bid higher than you to get it.   I'd try to get it locked up now.

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  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    7y

    If you have a nice deal that you're happy with, then get them to sign and get it closed before the tax auction.  Sounds like you are the only deal in town right now.   If it goes to auction, then you may have lots and lots of bidders who want to bid higher than you to get it.   I'd try to get it locked up now.

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    I agree with Bruce, get it done now before you have competition.

    0Reply
  • Kellie Alkayam
    OP
    Rental Property Investor · Golden, CO · Member since 2017 · 27 posts · 11 votes
    7y

    That's exactly what I ended up doing. Got it under contract, and asked for a 30 day close (they wanted more time, which obviously isn't going to work - I don't know if they understand the seriousness of the situation, or if they are somehow unaware). 

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    7y

    If you can't close before the auction you can often stop the auction by paying part of the taxes and giving a "promise to pay" (At least in my area). Often times you can also show the Purchase and Sale contract and they know they will be paid when it sells, which will stop the auction. If the deal is that good Risking a couple grand in paying the taxes (and removing it from the sale price) wouldn't be out of the realm of what I would do. 

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  • Jeffrey Grieshop
    New to Real Estate · Coldwater, OH · Member since 2018 · 105 posts · 61 votes
    7y

    @Mike Cumbie I have been looking at a property scheduled for auction in about 10 days. Would your consideration of "paying some taxes and a promise to pay" be an option here? How would I proceed to do that? 

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    7y

    Hi @Jeffrey Grieshop I have seen properties "fall off" the list to be sold on the day of the auction often. If you are the owner (or can make an agreement with the owner) it's pretty easy. If you are just some guy with no interest in the property then it's not so easy. In this case she already has an agreement with the people that can do that, so she needs to just work with them a little and it will be stopped. 

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  • Jeffrey Grieshop
    New to Real Estate · Coldwater, OH · Member since 2018 · 105 posts · 61 votes
    7y

    @Mike Cumbie thank you! So the property I looked at has been vacant for a long time. It has sat vacant over the span of 7-9 years I think.  the lender is my county's treasurer. But the owner is still listed under their name (pulling this data off of a site). At this point, what is their motivation to make a deal? The property has sat vacant for years, the owners are pretty far away, it is going to auction. Are they still able to retain some equity from this property as the homeowners? Is making a deal with the treasures office a possibility, as in legal? 

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  • Tom Kentop Jr
    Member since 2018 · 24 posts · 2 votes
    7y

    @Kellie Alkayam

    I've noticed people tend to sell in the end if they are expecting to lose the property.

    You could either tell them that you need them to pay up to complete the deal and adjust your offer accordingly or you need to close before the auction date.

    You may also be able to try contacting the county and see if the parcel can be removed if you supply them with a signed contract.

    Depending on redemption rights etc you may be able to place a lien sighting the contract to purchase if you can't stop the auction or have the ability to close. Then either attend the auction and see if you can buy it for a steal or claim redemption rights if someone else wins.

    Just a few ideas both in and out of the box.

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  • Kellie Alkayam
    OP
    Rental Property Investor · Golden, CO · Member since 2017 · 27 posts · 11 votes
    7y

    Wow, thanks for all of the suggestions, everyone. It hadn't occurred to me to contact the county, but I just may do that. I have a signed contract, but I included an addendum asking for a 30 day close, and I haven't received a signature from the seller, so I think I will reach out to the county and see what can be done to get the property removed from the auction just to be safe. I'll let you guys know what happens. 

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  • Kellie Alkayam
    OP
    Rental Property Investor · Golden, CO · Member since 2017 · 27 posts · 11 votes
    7y

    Alright, so I called the county. They said they've been trying to collect since 2011, and the seller is well aware of it. If it's not paid in full by May 11th, it's going up for auction, and there's no stopping it.

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    7y

    @Kellie Alkayam

    Couple things, Close before May 11th and all is well. Let the seller know if they are serious that you are too but need to move. If not then the county said "It's going to auction and there is "NO STOPPING IT" So sign this and lets get you some money and get out of this and into where you need to be. (Add Drama for flair and effect) Make it sound like this is the last moment before agents show up and throw their belongings into a shopping cart forcing them into a life of living in a van down by the river!

    In reality. The person answering the phone at the county saying "There is no stopping it" is just doing the same thing to you trying to get you to pay in full (You will NEVER see that money or the property again if you do). A good lawyer with a knowledge of the system and a bit of craftiness can delay this another 5 years if they had to. So I would say get them to sign and then close or get a rockstar RE lawyer to step in. This solution is not a $500 fix, but if the rest of the numbers work add this as an expense if it still works. 

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  • Kellie Alkayam
    OP
    Rental Property Investor · Golden, CO · Member since 2017 · 27 posts · 11 votes
    7y

    Got a signature, and a closing date of May 1st. Cutting it close, but I think it will all work out. 

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