Does higher bid at tax auction decrease likelyhood of redemption?

Question

A few questions about tax foreclosures that I'm hoping the BP community can help answer.  I'll be bidding in Texas but I suspect these are general questions:

• If the minimum bid is $5000, does this mean that the homeowner owes exactly $5000 in back taxes?
• If the winning bid on this property ends up being $11250, who keeps the additional $6250?
• If the answer to #2 is the homeowner (let's call him George), does this mean that George will likely just turn around and use the $6250 ($5000 taxes plus 25% redemption premium) to redeem the property from the winner of the auction?
• If George has $100,000 left on his mortgage when the property is sold at the tax auction for $11250, who is responsible for that mortgage payment?

Thanks ya'll!Tom

Tom MacDonald · Answer

Thanks @Bruce Lynn, great info!

So just to be clear, if the title search shows that a significant mortgage is owed on the property, I should  probably walk away?  I have read that the mortgage is cleared after the auction but this seemed unlikely to me...

5. I've partnered with a friend from back home.  He's the boots on the ground.

Also another BIG question - is there any way to confirm whether the property is a 'homestead property' before the auction?  When I look up a property on the county appraisal district website I sometimes see that the "owner mailing address" and "property address" are different - but there is still a homestead exemption on the property!

Bruce Lynn · Answer

1...different in different counties....most often this is taxes, penalties, attorney's fees.

Could be the tax value of the property in some places.

2.  Tax authority gets the balance unless the owner is smart enough to request the overage within 30 days.  Tax authority does not notify them after the sale or give them notice there is an overage....so normally tax authority gets it.

3.  You think differently than many people who are losing their house to foreclosure.  Very different mindset.  Possible....no slight to the people who are losing their home, but I don't think most are that savvy.

4.  If there is a mortgage...chances are it will not go all the way to auction.  Mortgage company will pay...often minutes before the auction.  Not always, but often.   Rare will you see a property with a mortgage actually complete the auction.  If it does, chances are when they see deed change, they will start hunting you down.

5.  How do you bid long distance from Australia?....most of the auctions you must be there in person...LIVE...

Greg H. · Answer

@Tom MacDonald

It does not matter

Tom MacDonald · Answer

Thanks @Greg H.

Also, if I bring a certified check to the auction, should it have my name on it or the name of my LLC?

Or does this even matter?

Greg H. · Answer

@Tom MacDonald

1. The minimum bid includes back taxes, interest and penalties and Attorney's fees

2.  The overage belongs to the previous owner.  They can petition the court for any overage

3. The redemption amount in this case would be $11250 plus the redemption fee

4.  The mortgage is not wiped out by the tax sale so in order to avoid a foreclosure(no redemption period) it will need to be paid