Anyone bought home(s) through tax sales?
- Thread starter SI_NYC
- Start date
My BIL bought a house in Chicago through a tax sale. He paid $250k (15 years ago) for it and it required almost that much in work to get it back to livable and up to code.
How much information are they giving about the house? Can you inspect it before purchase? Tax sales can be a crapshoot, especially with older houses.
How much information are they giving about the house? Can you inspect it before purchase? Tax sales can be a crapshoot, especially with older houses.
There is no info as of now. From what I've gathered is that I would be bidding (what interest rate and possibly some additional money) on the right to pay the back taxes and if the current owner doesn't end up paying the back taxes, I the winning bidder, could foreclose on the property.
In this case, I know that the occupant has passed away and there doesn't seem to be anyone to inherit the property, so I believe there may be fewer obstacles in acquiring it. The property is in poor condition, and I estimate it will require $100,000 to $200,000 worth of work to make it livable. I'm willing to invest that, especially considering that similar houses in the area are selling for over $800,000, making this a potentially worthwhile investment. However, I am concerned about any unforeseen issues that may arise.
Yeah, the uncertainty definitely drives the “deal” aspect.
At least you know why they stopped paying taxes. There’s also the benefit that you’re likely only bidding against other individuals. It’s unlikely any large corporate buyer would want to dedicate the time and work to renovate. Corporate buyers have basically sucked any deal to be had out of foreclosure sales in my area.
How much are the back taxes? Just curious.
Getting a decent loan to purchase and fix up might be problematic. If you've got a lot of cash handy, it might be a great deal. I've never done a purchase/auction like this, but have bought bank-owned properties as well as a 1031 exchange.
It sounds like an interesting opportunity and you’re smart to do a good due diligence.
Get a good warranty deed and best of luck.
I'm not sure of the exact taxes but I'd guess around $20K. I can self-fiance the renovations, so that isn't a concern.
I don't have my hopes too high but I'm curious and in this situation knowing there most likely isn't anyone to claim the house, it could be a good investment.
I looked into a couple times when looking for my current home. There is actually a castle down by St Mary that got like 2/3rds built and then the couple broke up and it has just gone to seed. It's a mansion, in a beautiful property but due to wind and weather I was told it would be cheaper to buy it and bulldoze it and build than try to fix it.
( that was pretty covid)
( that was pretty covid)
Tax sales are very confusing to navigate. You need to talk with your county treasurer about the process because it can vary county to county. I purchased an empty lot on tax sale along with 15 other individuals. We each retained 1/16th ownership. After the 2 years (the amount my county requires you to wait) the other 15 dropped out and I won the property. There are more than a few corporations in Iowa that bid on every tax sale property. They have no intention of redeeming, they are hoping the owner pays the back taxes, with interest. That's how they make their money. Again, talk with someone who knows how your county operates.
Yes, I was reading that. There are two ways to approach these sales. One is to bid a higher interest rate to make that money if the owners pay their sales tax (probably not feasible in the area I'm looking at, as demand is very high) and two is to hope the owner doesn't pay their property taxes so you foreclose on them (in my case the owner is dead and they haven't been able to find anyone to inherit the house in over a year).
I'm very familiar with the process in Iowa, but not NY state and the process and laws vary widely. In Iowa, usually once a year, each county treasurer sells off unpaid delinquent real estate taxes to registered buyers at a set time, date and place. Registration is a pretty simple process and the Treasurer sells registration numbers to those parties interested in participating in the tax sales, the price of a registered number is usually $1/number or small nominal amount, but is set by each county treasurer. There are a number of investment firms that attend almost every county's tax sale and they invest $1,000s of dollars buying as many registration numbers as their budget allows. There are some individuals that attempt to play the game, but they don't usually have the capital to buy as many numbers as the big firms do.
On the day of the tax sale, every party who is registered gather and each parcel with taxes being sold is announced one by one by parcel # and deed owner's name. Then a treasurer staff member will use a random number generator to draw one number from all of the list of registered numbers that was sold, like a lotto draw. The owner of that registration number then indicates if they will buy that specific tax sale lien or pass/decline it. If accepted it's then registered to that bidder and they move on to the next parcel. If it's declined, they'll draw another random number until someone wants it or if declined numerous times the county then becomes the lien holder for that property's delinquent taxes. The big firms also do their due diligence and will decline any undesirable properties that are offered (mobile homes, property with hazardous materials, etc.) After the sale the registered buyers then pay off the delinquent taxes, penalties and interest on that lien property and they are now entitled to be paid that same amount by the property owner plus 1% of the balance in interest for each month that the tax sale buyer holds the lien as unpaid. After a certain amount of time (Iowa I think it's 18-24 months, I can't recall exactly) the tax sale buyer can move to capture the deed on the property which involves certified mail to any parties with an interest in the property and they also may be required to publish legal public notice in the local newspapers as to their intent to foreclose on the tax lien. If everything was done properly and enough time has passed then the deed is surrendered to the tax sale buyer.
So a number of years ago in Iowa City a married couple who owned their home free and clear, left the country and moved back to somewhere in SE Asia to care for an older relative and they left their teens/young adult children in charge of things in Iowa City. They didn't however arrange for the annual payment of their home's property taxes while they were gone. Apparently the kids didn't bother opening their certified mail or if they did they didn't understand what they were reading. The delinquent taxes were sold, a couple of years passed and eventually the kids at home in Iowa City got a knock on the door that they would need to move out of the house as the tax sale buyer had completed the process and was now the legal owner of the property. I believe the tax sale investor ended up selling the home back to the original owners at close to fair market value. I don't know if the absent parents murdered their kids or not, but you have to think they came close to doing so. Some of the blame falls upon them as well.
Caveat emptor and good luck @SI_NYC, perhaps this particular property isn't desirable for most of the big fish buyers and it all works out for you.
On the day of the tax sale, every party who is registered gather and each parcel with taxes being sold is announced one by one by parcel # and deed owner's name. Then a treasurer staff member will use a random number generator to draw one number from all of the list of registered numbers that was sold, like a lotto draw. The owner of that registration number then indicates if they will buy that specific tax sale lien or pass/decline it. If accepted it's then registered to that bidder and they move on to the next parcel. If it's declined, they'll draw another random number until someone wants it or if declined numerous times the county then becomes the lien holder for that property's delinquent taxes. The big firms also do their due diligence and will decline any undesirable properties that are offered (mobile homes, property with hazardous materials, etc.) After the sale the registered buyers then pay off the delinquent taxes, penalties and interest on that lien property and they are now entitled to be paid that same amount by the property owner plus 1% of the balance in interest for each month that the tax sale buyer holds the lien as unpaid. After a certain amount of time (Iowa I think it's 18-24 months, I can't recall exactly) the tax sale buyer can move to capture the deed on the property which involves certified mail to any parties with an interest in the property and they also may be required to publish legal public notice in the local newspapers as to their intent to foreclose on the tax lien. If everything was done properly and enough time has passed then the deed is surrendered to the tax sale buyer.
So a number of years ago in Iowa City a married couple who owned their home free and clear, left the country and moved back to somewhere in SE Asia to care for an older relative and they left their teens/young adult children in charge of things in Iowa City. They didn't however arrange for the annual payment of their home's property taxes while they were gone. Apparently the kids didn't bother opening their certified mail or if they did they didn't understand what they were reading. The delinquent taxes were sold, a couple of years passed and eventually the kids at home in Iowa City got a knock on the door that they would need to move out of the house as the tax sale buyer had completed the process and was now the legal owner of the property. I believe the tax sale investor ended up selling the home back to the original owners at close to fair market value. I don't know if the absent parents murdered their kids or not, but you have to think they came close to doing so. Some of the blame falls upon them as well.
Caveat emptor and good luck @SI_NYC, perhaps this particular property isn't desirable for most of the big fish buyers and it all works out for you.
Curiosity is killing me. Is this in Davenport or Des Moines? address?
Beware. This is something that requires a level of legal expertise. With some recent court rulings on their constitutionality I would tread carefully.
South of DM. Down by Martensdale if I remember correctly. The guy that knew about it lived in Indianola.
I just googled and it is a town of 500 people. Weird there would be something like that in such a dinky town. I was thinking this place was nestled away in DSM somewhere...
No. It was a total hideaway on a gravel road.
I don't remember the story but it was very obviously a rich couple that wanted to live out of the city.
( and my wife and I want to be out of the city also with 2 wfh jobs, plus that Martensdale/status Mary school district is good. )
But a mansion, like, fountain in the drive way, wiring for chandelier was in, mansion...
But decrepit.
This is the kind of thing which will drive me nuts until I figure it out...
I haven't spoke with the guy who knew about it in probably 4 years but let me see if he answers.
This is it. It was a carlise address I was wrong. I kind of mixed up 2 places.
This is as nice as it ever looked, when we looked at it it was way worse and anything of value had been removed to recoup.
15810 Highway 5, Carlisle, IA 50047 | Zillow
15810 Highway 5, Carlisle IA, is a Single Family home that contains 5699 sq ft and was built in 2003.It contains 3 bedrooms and 4 bathrooms.This home last sold for $425,000 in November 2016. The Zestimate for this Single Family is $1,618,000, which has increased by $6,335 in the last 30...
www.zillow.com
15646 Highway 5 Hwy, Carlisle, IA 50047 | realtor.com®
View detailed information about property 15646 Highway 5 Hwy, Carlisle, IA 50047 including listing details, property photos, school and neighborhood data, and much more.
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Damn. Impressive. $1.6M…This is it. It was a carlise address I was wrong. I kind of mixed up 2 places.
This is as nice as it ever looked, when we looked at it it was way worse and anything of value had been removed to recoup.
15810 Highway 5, Carlisle, IA 50047 | Zillow
15810 Highway 5, Carlisle IA, is a Single Family home that contains 5699 sq ft and was built in 2003.It contains 3 bedrooms and 4 bathrooms.This home last sold for $425,000 in November 2016. The Zestimate for this Single Family is $1,618,000, which has increased by $6,335 in the last 30...
15646 Highway 5 Hwy, Carlisle, IA 50047 | realtor.com®
View detailed information about property 15646 Highway 5 Hwy, Carlisle, IA 50047 including listing details, property photos, school and neighborhood data, and much more.www.realtor.com
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