Hi. I am getting ready to atend my first county tax foreclosure auction in a few days and am thinking of bidding on a property. In my state (washington), I understand that when a county auctions off a property for delinquent taxes, that all other outstanding liens are extinguished upon sale to new owner. If that’s the case, is there any reason to do a title search? Am I correct to assume that I don’t need to worry about any mortgage outstanding?
Secondly, I was advised by a colleague that if I want to play it safe, I should be willing to bid only up to the amount that the land is worth, and not consider the structures that might sit on the land (in this case there is a dilapidated house that would need major cosmetic repairs ~$20-$30k?) . The assessed value is ~$30k, roughly $15k for the house and $15k for the land. The outstanding tax bill is ~$12k. Any advice on where to set a maximum bid?
It sounds like the house is not worth anything, in fact if it is that bad it will actually cost you to demolish and remove. So factor that in with the 12.5k and you have probably 22.5k in the property. At 12.5k you would be above the min and can use that as a good starting point. Many factors are to be considered and w/o complete knowledge of your particular situation is difficult to give a solid response.
Here’s an update … attended my first county foreclosure auction last Friday. Was told by the county treasurer’s office to expect about 90 people. In reality, I estimated about 200 showed up … some waiting outside the door.
Wanted to bid on 2 properties near the Washington coast – a 2-lot parcel with minimum bid set around $5k, and another slightly larger parcel with a decrepit house on it starting at around $13k (also in same vicinity). Was prepared to offer up to $10k for first parcel; it went for an astonishing $30k. Was prepared to bid up to $20k for second parcel; it went for an astonishing $44k!
In both instances the winning bidders seemed to be neither speculators nor real-estate investors. Both wanted the properties for personal use. The first one wanted to move there; the second wanted to build a summer cabin where he could bring his dogs.
In all, about 25 pieces of property went up for sale. Every single one of them sold for well above the minimum bid and well above the assessed value.
So I didn’t get any property, but I found the process intriguing and instructive! Just wondering, is it unusual to have properties at tax sales go for several times their assed value?
Notice that the two parcels of interest to you were sold not for their investment value but for their emotional value. Another reason to know your subject matter when bidding at auction. Thanks for sharing your experienc.