This is one of those “it doesn’t make sense” transactions. There is no reason that I can determine that the seller should have done what he did.
It started out just like many other transactions…I was contacted by someone who wanted to sell a house that they had. It was a second home that his daughter was living in.
He was tax delinquent. In fact, he was four years behind in taxes, and in my neck of the woods, that means that the tax deed auction is not far off.
He wanted $25000 which seemed to be a decent deal because the house was in good shape and was worth much more, about $40-$45000. I said “Thanks, but I’ll wait for the tax auction.” He said, “It won’t go to tax auction because my son is going to give me the $7500 in back taxes.” I said, “Good for you.”
About two months went by and the seller calls me up and says, “I’ll lower the price to $15000.” I say, “Thanks, but I’ll wait for the auction. BTW, did your son get you the $7500 to pay the taxes?” “Not yet, he’s working on it. But it will be OK.” I said, “I’m sure it will be, good luck to you.”
A few weeks later I was preparing to go to the tax deed auction to be held the next day, when my phone rings. It is this guy who says, “My son wasn’t able to get the money. I don’t want the county to get the property. What will you give me for the house?” “Well, that’s too bad.” I say. “Do you have anyone else who might be able to give you the monies?” “No. I just don’t want the county to get it.” “OK.” I said. “The problem is that the auction is tomorrow and I don’t have any time to check the title to see if there are other liens or any other issues.”
He says, “The property is free and clear. I don’t have any liens against it.” “OK, I believe you.” I say. “But there can still be title issues and I can’t take a chance without running a title report and there is just no time. The best I can do is to offer you $100. This way, if there are issues, I won’t be burned too bad.” He says, “That’s not much, but OK. I just don’t want the county to get it. Can you come right over?” “Sure.” I say.
Quick like a bunny, I draw up a Quit Claim Deed. I jump in the car with my wife and head over to his house. This is where the story starts to get strange.
The man’s residence was also free and clear. His wife has never worked because he is an engineer at the railroad, probably making at least $60000. As a child, he had helped his father to build this house and an identical one next door. He grew up in this house and his kid was living in it. It certainly needed a good cleaning, but not much more. One window was broken, but otherwise, the house was in good shape.
Both houses were free and clear. I don’t know why he didn’t refinance the tax delinquent house to get the $7500 for the back taxes. I don’t know why he didn’t rent the house out. I don’t know why he didn’t list the home with a Realtor. It surely would have sold at some low price, and for a lot more than a ridiculous $100. All I do know is that he didn’t want the county to get the house.
The next morning I ran to the county building. I did a quick title search, found no liens but I did uncover a small title defect. Satisfied, I recorded the deed and paid the $7500 in back taxes.
I rehabbed the house and resold it for $97000.
This is not an unusual story.
A few months ago, a student of mine was given a home. The student was investigating properties scheduled to go to the upcoming tax auction. The owner didn’t want any money. He just wanted to be rid of the house because the memories of what had happened in the house were too painful for him to bear.
My student said, “Well, if you don’t care who gets the house, then give it to me and I will make sure that some deserving family gets to use it and I’m sure that they will keep you in their prayers.”
The man said, “OK.” The house was worth $60000. My student sold it quickly for $40000. This happens more than you would guess.
Coach Mitch’s “Ridiculously Simple System…” teaches you how to take advantage of the deals available in tax delinquent property.