Can I buy a home before the auction starts?
Patrick BergeronPro Member
Rental Property Investor · San Diego, CA · Member since 2021 · 25 posts · 12 votesCan I buy a home before the auction starts?
Most Popular Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesQuote from @Jonathan Greene:
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.
However to answer the OP question sure you can do this and you can redeem right up to day before the sale and in the old days in CA when the sale started at 10am and the tax collector opened at 8am you saw all sorts of people lined up to pay their tax's.. so when the sale started you should hear the grown from those thinking they were going to bid on this cool property only to have it removed last second.. So to be efficient at it you need to target at least 50 parcels to hope to get a few.. My dad had a machine he bought about 100 a year in the one day at the tax sales and in the 50s and 60s there were companies that would buy 1000 or more in the few days during the sale.. this was San berdo and Riverside counties and Lake co and any county that had 1000s of historic old platted lots that were never developed. so just going down memory lane here LOL
8 Replies
- 4yPeter MckernanBusiness MemberResidential Real Estate Agent · Irvine, CA · Member since 2013 · 2k+ posts · 1k+ votes
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!
The McKernan Group4.957 Reviews - Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes4y
A common strategy, here they get dozens of letters, bunch of door knocks.
- 4yJonathan GreeneBusiness MemberReal Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes
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.
- 4yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
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
- Investor · Van Isle · Member since 2021 · 455 posts · 226 votes4y
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.
- Real Estate Agent · Phoenix, AZ · Member since 2019 · 158 posts · 140 votes4y
@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.
- 4yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesJonathan does not work that way in CA.. the TAX sale is absolute and held once a year anything on title is wiped out .. there is no confirmation or upsets or any of the machinations that are done back east. the reality is though if there is debt the lender knows they are going to be wiped out so they will step in and pay the tax's.. We do this work out in the west but we ONLY chase deals that have no debt on them .. and you can work for a few months and you might nail one or two of them.. so its a very low probability deal and its belly to belly and the folks your dealing with can be very tough to get them to move to sign anything.
Quote from @Jonathan Greene:
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.
However to answer the OP question sure you can do this and you can redeem right up to day before the sale and in the old days in CA when the sale started at 10am and the tax collector opened at 8am you saw all sorts of people lined up to pay their tax's.. so when the sale started you should hear the grown from those thinking they were going to bid on this cool property only to have it removed last second.. So to be efficient at it you need to target at least 50 parcels to hope to get a few.. My dad had a machine he bought about 100 a year in the one day at the tax sales and in the 50s and 60s there were companies that would buy 1000 or more in the few days during the sale.. this was San berdo and Riverside counties and Lake co and any county that had 1000s of historic old platted lots that were never developed. so just going down memory lane here LOL - 4yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Dan H.:
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
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.
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