Plan B: Buying Property at a Tax Sale

In order to save money, I've come to the conclusion that we're going to have to spend a little first. Sound a little ass backwards? Now wait a minute, and hear me out....

I have a plan...


Chances are, you've heard about buying properties and houses for cheap, cheap, cheap at tax sales. As far as I know, every county in the United States has some sort of property tax sale every year, and my county is no exception.

Here's a little more about buying a house at a tax sale.

As I mentioned above, every county has a tax sale, which are usually auctions. The properties and houses at these tax sales are being sold because their owners were unable or unwilling to pay their property taxes. That's bad for them and great for anyone that wants to buy a house cheap. The county wants to recover their money somehow, so they offer properties and houses to the public for very little money - usually in the form of an auction. Typically, the starting bid on a piece of property or a house starts at the amount of back taxes plus any fees.

In my county, there are three tax auctions each year.

Upset Sale



The Upset Sale* is the first of the three tax sales in my county. The minimum bids on properties in these types of sales typically start at the amount of any back taxes plus some fees. In my county, this means that some properties start with a minimum bid of less than $1,000.

Houses and properties in these auctions, however, are not without possible problems. Before bidding on these properties, you need to do a little homework.

First, you need to find out if there are any liens or judgments against the property owners or the property itself. If there are and you buy that property, there's a good chance that you'll be responsible for these. Meaning that you'll most likely have to pay big bucks to either pay off a lien holder or judgment, or a lawyer to get out of it. So, make sure you do a thorough title search on the property before bidding. I'll get into this more in my next post.

Second, you have to check out the property on paper. Your local assessment (or similar) office should have most of what you're looking for. The nice ladies and gentlemen at this office can usually help you find a parcel number for the property you're looking at and pull it up on a computer. You'll be able to find out the estimated value of the property, how many buildings are on it, how large it is, where it is, and where its boundaries lie, along with a bundle of other information. I found a neat website called Property Shark where I can do a quick preliminary search before I hit the assessment office. I'm sure its not 100% accurate, but it seems to be pretty close.

Finally, you need to check out the property...in real life. This is where it gets tricky. Okay, it gets downright difficult. When looking at buying a property at a tax sale, there's a little catch - you aren't allowed to set foot on that property. If you do, you could get charged with trespassing. So, you need to get as close as possible to the property - legally - to see what type of condition it's in. If necessary, buy a good pair of binnoculars...

Judicial Sale



"What happens if a property doesn't sell at an Upset Sale?" you ask...

It gets put on the list for whats known as a Judicial Sale. In my county - as with many other counties - if a property doesn't sell at the upset sale and the property owners don't pay the back taxes before a certain time, it gets put up for auction at a second tax sale, a Judicial Sale.

Properties and houses in this sale are usually free and clear of any liens and judgments and other bad stuff. But, don't let that stop you from doing your homework anyway! The minimum bids on these properties also usually start at the cost of fees and court costs. In my county, that can mean the minimum bid on a property might be as little as a few hundred bucks. Of course, with a free and clear deed and a price that low, get ready for some crazy bidding!

Repository Sale



"What happens if a property doesn't sell at a Judicial Sale?"

It usually goes on another list to be sold in another sale - a Repository Sale in my county. This list consists of all the leftover properties that didn't sell the first two times around. Hours in front of Google Maps satellite view, two days of driving around, and $50 in gas after receiving this list, I finally figured out why they didn't sell.... No one wants them - and for good reason.

Most of the properties on this list are pretty well junk. They're usually something like empty lots or dilapidated mobile homes and houses. However, I got ahold of this list pretty late in the game, so there might be some good stuff on it right after the Judicial Sale. And, from what I understand from my "inside source" at the county courthouse, they'll accept just about anything we bid and bidding starts at $50 to $250 here, depending on the property. Not a bad way to score a few acres for a future building site.




So, there's my rundown on tax sales, at lest in my area. If you haven't figured out what my plan is by now...well, I don't know what to tell you.

How is dropping a couple grand going to save me money? Simple - no more rent!!! We pay over $500 in rent each month. I figured out that T and I have spent about $20,000 in rent during the past three years alone. In my area, that's the price of a small, yet livable and decent, house or piece of land.

In the next few weeks, I'll be adding more about tax sales, and I'll even try to take you along on my first tax auction. Fun, fun!! Here are a few ideas for future posts:

• How to Find Properties For Sale on Back Taxes
• How to do a Title Search
• What to Look For in a Property For Sale on Back Taxes
• How to Find the Best Properties at a Tax Sale
• Buying Property at a Tax Sale: Should You Feel Bad?

Plus, I'll let you know exactly what influenced my decision to buy a house this way. It makes for an interesting story.

If there's anyone out there with any experience in buying property on back taxes, feel free to comment with any tips or advice!

*Fun fact... According to the lady at the courthouse, Upset Sales are not so named because the owners are upset about their properties being on the auction block. They're called upset sales, because the minimum bids start at "upset prices", or the amount of any back taxes, etc, etc.

Death By Electric

In my last post, I went through ways that I could stop spending my money and start saving it. After getting my electric bill last month, however, I now realize that I missed one big thing that’s just eating my money away.

You guessed it…my electric bill.

Now, my electric company – the lovely bunch of people they are - did just raise their rates for electricity, but after taking a look at my bill, I know that’s not the only thing causing the increase. Basically, I went from about $50 a month to about $80. My math might be wrong here, but that looks like about a $30 increase, and it’s not all caused by the nasty electric company. It’s obvious to me now that my household is using entirely too much electricity.

During the last couple days, I took a little tour of my house, trying to spot our problem areas. I was actually surprised at what I found…

1. Three Cell Phone Chargers Plugged In
   
   Somehow we had left these chargers plugged into the wall sockets, without them actually being connected to any phones. Here’s the best part though – we only have two cell phones, one of which gets used regularly. I know that these don’t waste enough electricity to make a huge difference, but they are energy suckers, nonetheless.
   
2. Two Televisions – One of Them On
   
   We have two medium sized televisions in our apartment. One of them is the dedicated movie TV, and the other is hooked to our Wii and Playstation for the kids. My darling children have gotten into the habit of simply leaving the game TV on whenever they walk away, partly because they don’t want to “lose their spots” in the games they were playing. The logic escapes me, but it also brings me to my next find…
   
3. Two Game Consoles – Both of Them On
   
   Again, not huge electricity wasters, big still energy suckers.
   
4. One Laptop – Plugged in With a Screen Saver Running
   
   Who did that? Guilty! Unlike T, I have a terrible habit of just leaving my laptop plugged in and on – all the time. I think my laptop gets shut off maybe once or twice a month, if it’s lucky. I know, it’s terrible on the old girl, but I still do it.
   
5. Lights Left On
   
   Upon further inspection of my home, I found that *someone* (not pointing any fingers) left lights on in the dining room, bathroom, entry way, and both of my children’s rooms. Keep in mind that this was in the middle of the day. I don’t know who would do such a thing! Also, my children insist on having a light on in either the dining room or the kitchen, because like many children and myself, they are afraid of the boogie man.
   
6. Clean Clothes in the Dirty Laundry
   
   Another habit my children have snuck it at some point in time is throwing their clean clothes into the dirty laundry basket. What fun! I don’t know if they do it because they aren’t sure whether the clothes are clean or dirty, if they just don’t feel like folding them, or if they just like messing with me. I’m guessing it’s a combination of the latter two. Either way, I still wash them – partly because I’m not sure whether they’re clean or dirty, and partly because if they were actually clean before they hit the basket, they’re dirty afterward.
   

So, there are my observations after my initial home inspection. Now, what am I going to do about it?

Well, the answer to the first four problems can be summed up in two words: power strips! The cell phone chargers, TV’s, game consoles, and laptop are all going to be plugged into power strips. Not only do televisions and most other electronics use electricity when they’re on, but they also draw “phantom power” when they are turned “off”. Apparently, electronics that can be controlled with remotes – like televisions and DVD players – are two of the biggest culprits, along with electronics with digital clocks and LCD screens. Sneaky little suckers, aren’t they? Switching off the power strips when these electronic devices aren’t in use actually turns them off off even when they’re…well, off.

There’s only one solution for the light problem. It’s time for another “kid lecture”. I know how much I enjoyed the lectures my father gave me when I was a child, and I’m sure my children find mine just as inspiring and entertaining. Also, to solve the “light at night” problem, I think I’ll just opt for a couple ingenious little contraptions called “nightlights”.

Laundry problem? same thing – lecture time. Although, since the weather is finally getting nicer, I think it’s about time to install a clothes line in my postage stamp backyard. I figure this little maneuver will help cut down on the electricity used by my dryer when my darling little ones attempt to ignore my laundry lecture.

Hopefully these little tactics will help me use less electricity and stop paying outrageous electric bills.

Take a look around your house sometime? What could you and your family do to use less electricity?