County Tax sales in No Cal

County Tax sales in No Cal

Oakland, CA · Member since 2016 · 51 posts · 26 votes

Need advise from auction and other investment gurus in Northern CA. Please feel free to correct any of my assumptions below and shed light on the process.

I have been looking at the county tax sales, seems like most CA counties hold these auctions twice a year. What I know so far, that the auctions are all cash, as-is, paid amount is to cover delinquent taxes and if there is anything left the 1st mortgage, all other debt (unless it is a government bill) is written off.  You can get an idea of outstanding assets from paid research sites like prop radar etc.

What I do not know - why do so many of seemingly good properties get "withdrawn" before the auction, do large investors/pros approach the owners and buy them before the auction?

Do you do research on a bunch of them and bid on the ones that are being bid at a reasonable price, to increase your chances of getting one or do you narrow down to just one and go all out ?

Do people also do title search on these? Does that become expensive if you are researching multiple properties?

Would love to hear from someone who has done this Northern CA.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    Majority of those properties that get redeemed last minute are by the owners.. who pull it out at the very end.

    you have some pre tax sales buys.. but many times title is buggered up so it needs to go to sale to clean up the title.  also lein holders ( banks step in and pay them so they don't get wiped out).

    Majority of tax sale props in N.. CA are left overs slices of dirt etc etc.. very few improved props ever go.  etc etc.

  • Investor · Truckee, CA · Member since 2013 · 546 posts · 445 votes
    9y

    In addition to what @Jay Hinrichs said, you also have the issue of non-profits being able to purchase properties before the auction in CA. See: http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=3695.5.&lawCode=RTC for more details. 

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    @Sean OToole  that's interesting... I have bought them from NON profits who took title from owners sub too back tax's thought they were exempt and we ended up buying them.  ( Moonies)

  • Oakland, CA · Member since 2016 · 51 posts · 26 votes
    9y

    Thanks for the input Jay and Sean, appreciate the input. If I do see something interesting and want to bid on it, is it OK to go by the research on property radar or does that miss some liens and a title check is suggested ?

  • Investor · Truckee, CA · Member since 2013 · 546 posts · 445 votes
    9y

    Tax sales are easier then trustee (foreclosure sales) as tax liens are the most senior and therefore wipe pretty much everything else out. Still you should do a title check, at the very least for IRS liens which have a 90 day redemption period (though they rarely redeem). We do a good job of compiling voluntary liens (mortgages), but we don't currently track involuntary liens (IRS, judgements, etc), and since our systems build title history on tens of millions of properties, no human has verified their accuracy, and we certainly do not guarantee it. Bottom line we'll give you a great heads start, but it's always a good idea to at least do a quick search yourself. Most of the stuff that happens in title is formulaic and can be automated, but sometimes it's more complicated and takes a real human to sort through. 

    The bigger issue with tax sales is that you may find it hard to get clear title until 1 year has passed as most title companies don't want to issue a policy until the homeowners right to appeal has expired (in CA there is no right to redeem, but they do have the right to challenge the validity of the sale).

  • Oakland, CA · Member since 2016 · 51 posts · 26 votes
    9y

    Thanks Sean.

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