Get cheaper homes at tax auctions. Post 183

UpperMichigansSource.com  3/28/2012  Cheaper Homes At Auctions

MARQUETTE — Home foreclosures are an increasing reality of our economy. The foreclosure rate increased by 1.8 percent in 2011, in Marquette county. For some it’s an opportunity to purchase a good home at a cheaper price.

Facebooker Jessica Mariin writes “We bought ours that way…Not much work inside, it was an awesome deal,”

Owning a home, perhaps with a white picket fence is the classic American dream that many of us have, but it can easily slip away. Especially with our economy if you don’t pay your taxes…the county takes away from people who don’t pay their property taxes.

On April 1 the county gets a list of homes that are being foreclosed. Ann Giroux, the Marquette county Treasurer, decides what property will be auctioned in August. “They’re sold to the highest bidder, but they all start at a minimum bid. Which is the delinquent taxes, so we are obviously trying to recover the taxes that are owing cause the delinquent tax fund needs to be made whole. So that’s kind of the first objective. Sometimes we make money on the property sometimes we lose,” Giroux said.

Officials say do your homework before purchasing a home in an auction. You should go to the register of deeds to see if there are unpaid taxes, liens against the property or second loans. Most importantly find out the condition of the home.

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Coach Mitch’s REFLECTIONS™

 

Be aware

It is always interesting to me how the Miscreant Class speaks out of both sides of its mouth. They issue the warning to “do your homework before purchasing a home in a [tax] auction.” This admonition is always given as if the tax collector has a legitimate concern for your welfare. Were they truly concerned; some other method of tax collection, short of taking the property, would have been created. Government officials, i.e. The Miscreant Class, simply do not want to be held accountable for their actions which they know to be harmful to citizens. The ‘concern’ is for themselves. The tax collector and their apparatus hope you see them as ‘just doing their job’, instead of being part of an insidious operation to fund bloated government.

Be wary

It is certainly true that you must carefully review all aspects of a property purchase prior to the purchase. I have never lost money in a real estate transaction precisely because I am careful. I never take chances, at least not in the way most folks think of taking chances. I only invest in sure things. I define an investment in ‘a sure thing’ as: getting something at such a good price that it can always be sold for a profit. It is virtually impossible to lose money if purchasing for 50% or less of the current FMV, Fair Market Value. Tax delinquent property is consistently lower in price than any other motivated situation and therefore, you will consistently find the best deals in this marketplace.

Know the market

The most important knowledge is to have a good understanding of current market values and conditions.

Buying a property at a tax deed auction is a wonderful way to attempt getting a great deal. You usually get the property without liens, so you only need be sure that the property fits in with your plans and you pay a price that is 50% of the market price – or less. Getting a property at a minimum 50% discount in a tax deed auction is difficult because the crowds are large and many are knowledgeable.

Buy before the auction

Because I found that I can do a much better deal when working with the tax delinquent owner directly rather than buying at the tax deed auction, I have concentrated on this approach and advise you similarly.

There are often many issues with property owned by motivated sellers and they will try to hide as many as they can; therefore inspection is a must. This is a hard fact, be sure to take it seriously. Do not, repeat, do not buy anything that you have not inspected. If investing remotely, have your representative take pictures and record their impressions. Most new cell phones have both the ability to take pictures and record voices.

Get educated

Of course, when inspecting, you must know what you are looking for. If you don’t, then bring along someone who does, like a contractor who specializes in rehabs. Have him explain what he is looking for and after a while you will have a good general understanding of what you should look for. I often went with other real estate investors to see what they were interested in and how they inspected.

As a general rule, people like to speak about themselves and show off their knowledge. Befriend other investors and bleed their brains by becoming an expert at asking smart questions. Example: “You say to find water damage by following the water trail. Can you show me where it is and how to follow it?”

Often, tax delinquent sellers will sell so cheap that you can overlook many problems. I’ve gotten property that has been so rundown that I can’t adequately explain the smell, nor how obnoxious the bugs were, nor how dirty the bathroom and kitchens were. However, look upon these ugly properties as gold. I don’t work on these anymore, those days are long gone. I hire the work out and so should you.

PP&C’s

The least costly and most effective repairs are Painting, Patching, Carpets, Cleanup and Curb Appeal. The profit made on a cosmetic rehab can be substantial. The previous owners are lost; they have no money, vision, ambition or desire to do anything other than run. These are the situations where you make gobs. BTW, the official definition of ‘gobs’ is: making profits beyond all bounds of decency.

A story

I remember going with another investor to see a home during the winter. The bathroom was interesting. It’s a good thing it was winter because the toilet was filled to overflowing with frozen human waste. The homeowner had not had running water for a while and couldn’t flush, but, having to satisfy a human need, and having no other place to go, he just kept on going and going and piled it up in the toilet bowl. Sadly, I didn’t see toilet paper in the waste. Needless to say, that toilet was replaced and not cleaned. When the other investor and I saw this, we looked at each other with disbelief and laughed. We laughed about this vision for several years.

Understand the mentality

The tax delinquent is “The most motivated of all motivated sellers”™ Try to put yourself in the mind of someone who has no choice but to continuously defecate in a toilet filled with his own excrement. It is a scene out of Dickens, in the bowels of Hells Kitchen. This person is desperate, but he is not stupid. Try to take undo advantage and he will give his good deal to someone else. But, treat this person with empathy, take needed decisions upon yourself, helping him to move to a better situation, and you have the potential to make gobs.

Coach Mitch’s “Ridiculously Simple System…”™  teaches you how to speak to this type of motivated seller. Remember, a person in a desperate tax delinquent situation does not need much to make him happy. Sometimes a working toilet is all that may be necessary.

Be kind,
(But for the Grace of G-d, that could be you.)