Anyone familiar wih tax deed sales in Texas?

[Mike Denver]

Hi all! I was very thrilled to find this site and I imagine I'll be hanging around here quite a bit... so I'm wondering if anyone has experience investing in tax deeds in Texas. I'm considering making the trip out there from California and I want to know if it's worth it. On paper, it looks great: you get back either what you bid plus a 25% penalty, or the property itself.

However, my experience with tax deed sales so far has been less than encouraging. At a recent sale I went to in Las Vegas, the entire auction had been hijacked by some foreclosure website whose members were bidding the properties up almost to market value. My concern about Texas is that people may be bidding the properties up to insane levels where the homeowner could never redeem in the hopes of acquiring the property. My goal is either getting a good interest rate, or acquiring the property at a large discount. Is this still possible in Texas? I'd probably be going to El Paso, or possibly a smaller county nearby.

Has anyone actually been to a Texas tax deed sale? How did it go? Any feedback would be much appreciated!

[Don Konipol]

There still exists a window of opportunity. The foreclosure companies have not hit Texas yet, as they have in Arizona, California and Nevada. But I am told by one of them that Texas is in the works.

That being said, Harris County (Houston) and Dallas County are the most active both in terms of properties and bidders. Texas foreclosure sales, whether mortgage foreclosure or tax foreclosure are held only on the first Tuesday of every month. So being at different auctions in different counties is a problem.

Opportunities exist, but research on each property needs to be done. Hidden problems abound. In one case of which I am familiar, a winning bid was $52,000, which was $30,000+ over the taxes owed (the property owner foreclosed on gets the overage). Problem was that a third lien on the property had changed hands - the law firm doing the foreclosure neglected to notify the current third lein holder - so after the party winning the bid paid the money they got a rude shock. The third lien holder's (who had not been notified) lien was not extinguished, he went on and foreclosed on the property and the winning bidder was left without property ownership and out $52,000.
The law firm that conducted the foreclosure assumed no responsibility, and the winning bidder had not been able to find an attorney to sue the law firm that filed the foreclosure notice without a large upfront retainer.