Mitch Goldstein | Coach Mitch | September 1st, 2007
Lake County tax sale will close traditional bidding
Monday, August 27, 2007 nwi.com (NorthWest Indiana) By Bill Dolan
CROWN POINT | Lake County commissioners hope to unload hundreds of tax-delinquent properties next week in a sale that also may be the last before a change in the way tax sales are conducted.
Potential buyers will gather one more time Tuesday and Wednesday in the Government complex’s auditorium. An auctioneer will ramble through hundreds of real estate parcels as audience members hoist registration cards to signal their offers.
But the future of tax sales is online, according to James Hughes, president of Indianapolis-based SRI Inc., which has been conducting the auctions for Lake County for several years.
“An online tax sale has a much bigger audience,” Hughes said. “You sell a lot more properties, and people get excited and active at bidding up prices.”
A split Lake County Board of Commissioners voted earlier to move their future tax sales onto the Web hoping to generate more revenue.
Next week’s traditional sale involves about 800 parcels for which taxes have been unpaid for at least two years and have been passed over in a previous public auction by the county treasurer’s office.
“In other states where we have run this, we have had bidding from foreign countries,” Hughes said.
See full article: http://www.nwi.com/articles/2007/08/27/news/lake_county/docfe2d93fecf5571478625734300822aa7.txt
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Coach Mitch’s REFLECTIONS
Online tax auctions are the future
Eventually all tax sales will be done on line. Probably, even mortgage foreclosures will move to online auctions. That is the way the world is moving.
The government units conducting the tax auctions really like this venue.
The marketing costs are much less with a digitized format. Emails do not cost much, certainly it is much less than the traditional method of printing and mailing the brochure of properties to be auctioned.
There are always many last minute deletions to the auction inventory because some property owners have finally rounded up the money and paid the back taxes so they don’t lose their property. With an on line auction, the government just hits “Delete” and eliminates that property from the auction. Easy.
On line auctions attract serious bidders. If you take the time to set up an auction account, then you probably won’t “just look,” you will often participate. The number of bidders is dramatically higher with on line auctions and the bids are significantly higher.
The issue I have is that the taxing jurisdiction will have a much easier time selling valueless Tax Lien Certificates or Tax Deeds to an audience that is not local.
In every tax auction, there are probably many parcels that have no value. That is why the owners do not pay the taxes on these parcels. The parcel is not worth the taxes.
Many of these valueless parcels do not sell at the auction and they are carried over to the next auction. You will often see parcels in the counties inventory that have been offered many, many times. The Struck Off lists have most of these properties.
In a hot real estate market, people think that any land has big value. They are mistaken. And their bad judgment will mean that the county will have more revenue – at the expense of the new owner.
The taxing jurisdiction places a fictitious value on these parcels. The assessed value is supposed to represent the fair market value of that parcel, but it rarely reflects the true value for these type parcels.
They aren’t making anymore land. Isn’t it all valuable?
No!!
Let’s list some valueless parcels.
A ravine. What will you build on a 60° angle?
Landlocked land. How will you get to it?
A long, thin parcel. What can you build on a parcel that is only 10′ wide?
A contaminated parcel. The clean-up costs will be staggering!
A wetlands area. Try getting the ducks to pay rent.
Land under a bridge. It’s probably good for a lemonade stand!
Land with sewer or drainage piping. They won’t let you build over the pipes, what will you do with it?
Got the idea?!! Certain land just isn’t even worth the taxes being charged.
Is it fraud for the government to place a high value on something that has no utility? Try to overvalue a stock and see if the government likes it?
Is it fraud for the government to continue to place high assessments on parcels that the marketplace says are worthless? By not purchasing it, the previous tax sale bidders have said that the parcel has no value. How can the government just ignore the fact that they are selling something without value?
Is it fraud for the government to try to sell these worthless parcels to uninformed investors? Investors trust the county to do what is right. I guarantee that if you were selling that strip under a bridge, a judge might overturn the sale because the “little old lady” was being taken advantage of.
I have spoken about this subject with several tax collectors. To a man, they all say that people must look out for themselves. It is like the wild west. However, in no other part of society is this behavior tolerated. No one can intentionally sell an item that is devoid of value, label it as having a value, and have that transaction stand up in court. It is FRAUD and our governments should not engage in it.
See Coach Mitch’s “Ridiculously Simple System…” ™ for details.
Caveat Emptor.
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