Tax deeds sales in Texas - not so great

Ok, the title of this message is kind of wrong. Sheriff tax deed sales in Texas ARE great. No state pays a 25% or 50% penalty/fee like Texas does if there is a redemption. That is awesome if you get a good piece of property.

But, I have noticed a problem when going to tax sales. Around DFW, it seems about 3/4s of the properties are “paid up” just before they come up for sale. And lots of these are paid the day before or same day the sale is going to occur! So what’s left? Stuff with IRS liens, or junk property - ie lots with no access, houses that are completely abandoned and trashed almost beyond repair (I am talking demolition quality houses, not something that is really worth rehabbing even). There are a few good ones, but they are few and far between.

There are tons of people out there hocking tax lien loans here in Texas, and I bet they are being proactive & getting a pick of the litter early on. They are even running TV commercials! Those liens trump mortgage liens, and most others. So I imagine these guys are out pitching their products to folks who are broke & have been listed on an upcoming sale sheet, and giving them a little more time to stay in or keep their property. They charge high interest rates (which is OK - its just business) and get to keep the property if there is a default, by taking it at a foreclosure auction. Texas allows 30 day non-judicial foreclosures, so that is pretty awesome from a lender’s perspective. I have heard the default rate for loans is quite high. Anyway…

Has anyone else in Texas seen this when attending tax sales???

Hi I’m Carla and I’m new here. I’ve heard that Texas was a great place to do some bidding over tax liens and tax deeds. Maybe those properties were paid for via the internet because auctions are also announced on some county websites. There are just others who are so fast when it comes to buying real estate properties since it’s a good investment.

Welcome to the world of tax lien and tax deed investing, it frequently happens in all states that at least half of the properties on the original list will be paid off by the time of the tax sale, and frequently this will happen the day before the tax sale. Most of the good properties will be paid leaving the junk properties and a few good ones on the list.

Along with the property owners coming in and paying what they owe in taxes to keep their property from being sold you also have “deed grabbers” that will work the lists for the deed sales and try to buy the property from the owner before the tax sale. This way they avoid the competition at the tax sale and get clear title to the property.

But in Texas and other redeemable deed states you also have a relatively new group of people who make money off of deliquent tax properties. They make their money by giving the property owner a high interest loan to pay their taxes and putting a tax lien on the property. This is not legal in most tax deed states or tax lien states, but Texas is a redeemable deed state and it legal in Texas. One of the major compnaies that has been doing this in Texas has tried to expand to other states only to find that it is illegal in tax lien states to put a tax lien on a property unless you purchase the lien from the tax lien sale or it is assigned to you from the county or another investor.

I agree. I am burned out on tax liens for now for the rest of 2010! Ha!

I have been looking at properties listed for resale in Travis County and was curious about a lot of the listings.

There are certain small parcels of property that are very strange and seem unusable…For example, there is a triangle shaped lot that sits behind 2-3 fenced in houses, and the frontage to these lots is a busy intersection right in front of a highway. Its in one of the most expensive areas of Austin TX, and because so it is tax valued at $140,000 and anyone could pick this up for less then $20,000.

There are several other land properties I have come across just like this…why did someone buy these, is it possible there is ever any value to them?

Just dont understand the story on these…It would have to be a real special situation/piece of land and for you to be able to get real creative to put any of these to use.