Can I buy a home before the auction starts?

Question

The local Property tax sale is coming up in a few weeks in San Diego County, CA, and the list of properties has been released. Is there anything stoping me from approaching the sellers prior to the start of the auction to try and purchase their properties? I was thinking of offering something higher than their tax lien (maybe double??), and a "subject-to" with their mortgage if they have one? I would also do a title report before making this offer to minimize any other pitfalls. This may be a county specific question, but any insight is appreciated!

Dan H. · Answer

I have participated in various southern CA tax auctions a few times and believe the only way it is not a large waste of time is to purchase prior to the auction.  This is what I have found:

• The property list is released and there seems to be many good candidate properties.
• You start checking out the various properties and find that some are just crazy such as hanging out over the freeway or have no access to the property and the owner of the property that had provided unpermitted access has placed a wall of debris blocking the access.  A property that shares a wall with another property where the 2nd property has a door to the roof of the property for sell (could require a drone to see).
• As the auction nears, the normal houses get removed as the owner gets current on their taxes.
• As the auction is a couple days away, I use my contacts to run preliminary title checks on a few of the best candidates remaining (I do not want to abuse the relationship).  The preliminary title checks typically come back clean (I had fears the first time I participated that many would be tainted), but not always.
• As the auction nears, the properties I had clean preliminary title checks get removed.
• I ended up bidding on a single property the last time I went through the process (I think 3 years ago).  I had driven by and checked out the property (including drone flights all around the property), had run preliminary title, had comps to know the range of value, talked to a neighbor about the property.  I had done my homework, but I had not seen the inside.  I had not known if the owner was going to do any sabotage.  I bid $640K on a property that if it was on MLS and was F/F financable would likely go for $780K.  It ended up going for ~$700K.  I suspect someone had inside information and knew the condition inside.  Either that or they over paid because I expect at least 10% reduction if the property is not F/F financable.  Add in no inspections or view of the inside.  This should have sold for near my bid (~82% of MLS price of MLS ready property).

It is my view that the process is broken.  I believe once the item is listed on the auction site, it should be too late to pay the taxes due and to get it removed.  With the current process, effort is exerted to vet properties that will not be available when the auction starts.  The effort is substantial.  We visited ~20 properties last time, did title checks on a few, did comps on a few, talked with neighbors on a few.  There are more efficient ways to find candidate properties

If you do go through the auction process, I would appreciate if you did a post of your experience/thoughts on the process.

Good luck

Peter Mckernan · Answer

You can go to the seller, call, door knock etc. for the place to purchase prior to the sale. The usual play on this is that they usually are stubborn and will not sell due to who knows why. I would be prepared for them asking for a lot of money or saying get out, but it is always worth a shot getting in prior to to submit an offer!

Justin Sullivan · Answer

@Patrick Bergeron

Dwayne poster has the right idea of going after the title holder but John Greene comment is also pretty correct. It’s tough but possible. I have purchased short sale and from auction and also bypassed the auction by going straight to the source, which was the bank, if it’s up for auction the home owner won’t have much control anymore. You would prob have to pay a ton to get them out of the hole if the bank will

Even accept it at that point. But you can bypass the auction by going direct to the bank with an offer. I did this a couple years ago and got the property under contract. We later backed out for other reasons but it’s possible. We had to call multiple times direct to the bank to

Get through but persistence will help. If you want to get seller prior to this you need to catch them in pre foreclosure.

Jonathan Greene · Answer

It doesn't work. Once it's reached the county auction, it's usually already passed the short sale stage and the bank has taken over and will only follow the process. Once the bank has taken over and they couldn't resolve the short sale, many owners have given up and aren't paying at all so their hole is bigger and their control less. However, the courthouse steps auction can get continued over and over so if you find one where the upset value is unusually low, you will just get in line with all the other people doing the same thing. Best thing to do is just bid and win at auction, but remember courthouse steps are no interior access so unless you've done it before, you have no idea what you are getting into and also all of the liens are not always disclosed.

Jay Hinrichs · Answer

Don in CA it is extremely rare that a actual house will go to sale for tax's  Tax sales in reality are land plays and you can buy land at the tax sales all through CA.  but houses this is not back east or mid west that has thousands of boarded up houses in each big city and hundreds of them go to tax sale yearly.. just not the same in CA by a very very very long shot..   in CA we never checked title was not worth the time .. tax sale wipes everything out and we rarely bought anything over about 50k it was all land.. so unless you had easement issues no reason to check title.

Wayne Brooks · Answer

A common strategy, here they get dozens of letters, bunch of door knocks.

Dwayne Poster · Answer

In my opinion you must pursue the title holder, if not to deal directly with them, to discover their motivations and capacity to recover the property. If you don't, you haven't locked down the deal until expiration of redemption, up until which someone else could interject and recover the property, out from under you.

Can I buy a home before the auction starts?

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