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I watched several tax delinquent real estate county auctions in California.
What amazed me is that usually really good houses there are sold for 85% to 90% or the market value.
This is amazing to me mostly because the real condition of the property isn't known (might me all trashed inside). Also home inspection isn't done. Also there are no agent commissions involved, this makes an effective value of such home 94% of the normal market value (assuming commissions are on average 6%).
So when the buyer bets 90% of the market value on the home, he essentially bets on the repair bills be <=4% of the market value (ex. $24,000 on $600,000 house).
Is such bet reasonable? I personally doubt it is on average. I feel people who bet that high are just regular buyers who fell in love/got emotioanlly involved with the property and are usually overpaying for this reason.
What would you think is the reasonable max bet on the county auction of the house in a good area?
What would investors intending to fix and flip the home for profit reasonably bet in such conditions?
I watched several tax delinquent real estate county auctions in California.
What amazed me is that usually really good houses there are sold for 85% to 90% or the market value.
What happens with those properties AFTER the tax sale?
Do you know what the redemption rules are?
What happens with those properties AFTER the tax sale?
Do you know what the redemption rules are?
Right of redemption in California ceases on the last day before the auction. After the highest bidder submits the payment, he gets the title of the property in his name.
50 years ago, tax auctions was a gold mine for investors and those who played theat fioeld.
40 years ago someone wrote a book on getting rich in real estate and the face of a new style of bidder appeared.
30 years ago someone offered seminars on buying real estate for the noicice with low cash and tax auctions was big part and the face of even newer tyoes of bidders showed up.
20 years ago, you could watch these late night half hopur long infomerical on getting ruck quick and even more people rushed to bid at these auctions.
10 years ago the internet started offering up instant (with a credit card) access to massive real estate investment advice including tips and trick on tax auctions. More and more people jumped on that bandwagon.
Today, infomercials, internet hawking, and the wave of TV shows showing epople making money on flipping and real estate investing at tax auctions and forclosure sales has brought out all the old has been investors and a new crop of wanna-bees.
Each time a new wave appears, the difference between the tax owed and price paid gets closer and closer to market value. Its no longer about recouping the most on taxes owed, now its about having a bidding frenzy which means higher prices.
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