I bought a house at our local county steps on Tuesday that the county has assessed at $550,000 (which I think is probably low) and I paid $66,000 for it! There was no mortgage on it either.
What in the world would make someone walk away from almost $600,000 in equity? He isn't dead. He talked to the lawyers just before the sale and told them he was just walking away. Luckily for me the crazy bidders didn't show up and I only had to bid a few times before the other two dropped out. Even the lawyers were shaking their heads saying "come on, really, no else is going to bid?".
Congrats on the buy. Before you count the equity, run full title work on this one. A county tax sale does not always clear everything, so check for code enforcement or municipal liens, unpaid utility or HOA balances, and any judgment or IRS liens against the former owner. Also confirm who occupies the house and whether the owner's redemption or possession rights have fully run out. A title insurance commitment before you pay anything else is the step I would not skip. And the assessed value is only a starting point, so compare it with recent sales of similar houses nearby.
Congrats, that’s a great buy. Before you celebrate too much, find out whether this was his homestead.
In Texas the owner can still redeem after a tax sale. If it was his homestead (or ag land), he has 2 years from when your deed is recorded. He’d pay you back what you paid plus a 25% premium in the first year, or 50% in the second. If it wasn’t his homestead, the window is 180 days at 25%. “I’m walking away” doesn’t bind him. People change their minds once they see a fixed-up house, or once someone tells them they’re sitting on $500k.
He can also file a claim for the excess proceeds from the sale. That’s a much better payday than walking away with nothing.
We buy tax deeds in Alabama. We rehabbed one during the redemption period and ended up at the Alabama Supreme Court over what the owner had to pay us back for the work. What I learned:
Pull a full title search before you spend real money. A price that far under value usually means something: an IRS lien (they get 120 days to redeem), code or demo liens, heirs, or a structural problem.
If you rehab during the window, document every dollar with invoices, photos and dates. Then talk to a Texas attorney about which costs you actually get back if he redeems. It may not be everything.
Plan on a quiet title before a title company will insure it.
Could still turn out to be a home run. Just know your clock before you start swinging hammers.
Thanks for the advise🙏🏻 I truly appreciate it. I bought my first foreclosure in Texas in 2017. I’ve bought 7 more since from the same courthouse steps from a foreclosure or tax sale. I’ve been lucky, no one has redeemed and I don’t put any money into them until the redemption period is over.