What are people thinking!

Question

Our county had a tax sale yesterday morning. Everything got redeemed before the sale except for two properties that weren’t sold at the last tax sale. One was offered at $47,000 last month and since there were no takers, the lawyers dropped it down to $1000 and still no takers. The second property was starting at $91,000 but there were no takers so the lawyers dropped that one down to $30,000 and still no takers.

Fast forward to the auction yesterday and they started the bid on the first property at $47,000 again and one guy raised his hand, we were all in disbelief. I would’ve paid $1000 for it, but I wasn’t at the last Tax Sale.

The second property started at $91,000 and I was prepared to spend $10,000 for it as my high bid. The same guy raised his hand again and bought it for $91,000.

Both properties are tear downs and in the slums of Seguin.  They are worth no more than $40,000 combined after tearing down two houses and cleaning the lot which will cost at least another $20,000.

I think people are getting caught up in the fact that if they win these auctions they think they are winning something without doing their homework in advance, it was really sad to see.

Jay Redding · Answer

I have invested in Tax liens and Tax Deeds for a number of years.  We see it every year. Unfortunately, people do not do the work to educate themselves about the sales and have no idea what they are doing. You pay the price of education one way or the other.

Chris Seveney · Answer

we have a property in FL where we own the 2nd lien (I hate 2nds but it was part of a large pool). We have foreclosed not 1x, not 2x but 4 times, yep 4 times. The reason being, each bidder prior did not realize it was a second. We have received approx. $50,000 from lost deposits on bidders because they do not know what they are bidding on. We have the 5th auction coming up next week. Lets see how it goes...

John Underwood · Answer

The biggest issue I see is people not knowing what they are bidding on because they are too lazy to drive by and puts eyes on anything they might bid on.

I have been doing this for about 15 years and get about 2or 3 new houses every year from tax lien auctions that don't redeem so the tax deed shows up in my mailbox.

Bruce Lynn · Answer

I see people win incredable deals and see some people get suckered and have no idea what they're buying.  Too many people don't even look at the property before they buy.  They go drive by after they got it.  What's worse is at some sales, the regulars will kind of jump in and I've even seen the sales attorney jump in and kind of warn people.....hey you know the building will need asbestos remediation, or you understand that's a partial, you understand that lot is too small to build, you know it's landlocked right?  and people still buy.  Now sometimes they have inside information or a plan with what they want to do with it, where it makes 100% sense to them to pay what they did.  But most of the time it is clear the people have no clue as to what kind of trouble they are buying and how the city is just waiting for someone with money so they can issue a demo demand or cleanup fines, or it has some other kind of trouble.

Ned Carey · Answer

Yes, I have been doing tax sales for 20 years and it has gotten very competitive. Some of the bids I see make no sense.

I see properties re-selling at auction and getting no or low bids. I look up the property and sure enough someone bought it at tax sale for more than they are able to resell it for.

Joe Watson · Answer

Agreed, lots to learn about tax lien sales.

I have heard younger investors say they were gonna buy up the tax and foreclose on the house SMH.

The good news is, you probably wont see that gentleman at a tx sale for three more years!

Charles Holder · Answer

sheesh that's rough.  i'm guessing you get the addresses online prior to the auction than drive by to see their state and come up with an opinion on value?  Nice to see you Mike!

What are people thinking!

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