This all depends on the laws in North Carolina and possibly the county the property is in as well.
The 2nd deal I did in Houston was a tax foreclosure property, and the 1st deal I did completely on my own here in Wichita, KS (Sedgwick county) was also a tax foreclosure. In other words I have dealt with 2 tax foreclosure properties, so I'm by no means and expert.
However, this is what I experienced. At least in Sedgwick county, you can buy before the auction if the owner is cooperative. Your seller sounds as if he is not, so that means you are going to have to go to the auction and bid on the property. Since you are not able to access the property, you just have to assume the worst and try to figure your costs of repairs by the worst scenario. But you don't have to be blind regarding liens, judgements, etc... Call a title company or a lawyer that does title work. In Kansas, we close at a title company, I don't know what you do in North Carolina. But whichever it is, go to them and ask for a preliminary title search. Title companies here will do it for free! That will give you the heads up on any other problems, plus you can speak with the closer or lawyer regarding how soon after the sale you can get title insurance, as I understand it is 2 years to sale a property you bought at a tax foreclosure sale, that is according to Kansas Secured Title. Of course, if you buy it before the sale then it's just like any other sale because you have to bring everything current. However, when you buy at the tax sale, it's supposed to wipe everything else away, except for IRS liens. You will need to discuss what your options are once you pull the title and see what's there with the title professional that helped you.
Regarding the actual sale. NO, you don't have to bid the owed amount. At least not in Sedgwick county. I was surprised at what some of the properties went for. Some were auctioned off at almost full market price. Maybe some of the bidders weren't investors, maybe they just wanted a home. I don't know, but there didn't always seem to be any logic. The opposite happened as well. Especially in land, a property might have started at $2,500 and absolutely no one would bid on the property. And then someone would get it for $50.00. It was usually just an empty lot.
Your best option when it comes to tax foreclosures or mortgage foreclosure auctions is always to get to the owner/seller before the sale and work out a deal so the property can be removed from the auction. Then you don't have all the competition, especially, those who have too many dollars and no cents (get it no cents? Ah, ah, I think I'm funny!)
Anyway, go to the auction, find out what you will need before going so you are not caught off guard when you get there, already have the price you are willing to pay writing down on a piece of paper. Don't let anyone else see that paper either. And then stick to your price and don't go higher than you have allowed yourself. What's the point of getting a property to just go broke. It kind of defeats the purpose of investing in real estate!
Anyway, I'm not an expert but I hope that this helps!
Sincerely
Daniel Wampler of Wichita, KS
