Tax Deed in Atlanta question

[Rick Baggenstoss]

I'm looking into purchasing a Tax Deed(s) in metro Atlanta, Georgia.  Tuesday I'll go to bid on a couple of them.  

My questions are:

- When a property is in pre-foreclosure, would you expect the bank to redeem?  Early or last minute?

- Since you're acquiring the Tax Deed, does the premium apply to the amount paid or the amount of taxes, penalties, etc.?

- I'd like to own some of these houses.  It seems safe to say the properties with lengthy periods of tax non-payment are most likely to be houses the high bidder could foreclose upon.  Is this a fair assumption?  

Thanks for your thoughts.

Rick

[Rick Baggenstoss]

So I just observed a municipal tax auction.  Everyone there was observing.  There wasn't even a bid on any of the 7 properties.  They were unbuildable lots.  Buildable lots would be worth $300k+.  

I had a chance to pick the brain of the auctioneer who runs the auctions for a number of the counties and municipalities in GA.  He summed up the strategies as one of two:

1.  Go after redemptions - focus on the larger value properties and hope for redemption.  Many bidders are from out of state and don't want a condo/land, etc. out of state.  Pre-foreclosures he said may or may not redeeem.  The bank will sometimes take the excess funds (difference between redemption amount and winning bid) as a immediate cash benefit on their books and write off the loan.  The loan is backed by Fannie/Freddie so it's a pretty reasonable approach for the bank.  In this case the winning bidder would own the property they may not want to own, but at a great price.  This happens when the loan is fairly new on the house so the principal hasn't been paid down much.  Competition for higher value tax deeds is pretty high.

2.  Go after the house - Go after tax deeds that have a lower likelihood of redemption because the house needs to be rehabbed.  This is not a passive approach, but one the small investor could do well.  

@Tom Yung Hope this helps you in some way.  Thanks for your thoughts.