The tax sale is held once a year at the convention center. It’s coming up – March 19. I had always been curious about these and I finally went several years ago and here’s what I learned.
* Dan McAllister himself runs/MCs the auction, and he’s a pretty funny guy actually.
* The vast majority of “properties” for sale are timeshares, which I think probably speaks volumes about timeshares.
* Many of the properties magically get redeemed a day or two before the auction, which means the list you see on the website isn’t really very representative of what actually gets sold at auction.
* At the auction they print out a book listing the properties with aerial photos and parcel maps. Costs something like $100 to buy the book and register to bid (which I did not do).
* As noted above, all encumbrances on the property transfer to the new owner. My guess is that if the current owner isn’t current on his property taxes, he probably isn’t current on a lot of other things either, so if you buy a property at auction it seems likely you’re also getting stuck a bunch of liens too. I don’t know whether the assessor would know about private notes or mechanic’s liens, so you’d want to research that as well.
* It seems like there’s a lot of smart money at these things. By smart money, i mean bidders who have run title searches the day before the auction and know the properties pretty thoroughly. The sense that I got is that you’re going up against sharks, and unless you’re a shark too you’re likely to get eaten.
* There’s also some amount of stupid money at these things. Once I realized that I was not the smart money and therefore this was not a game I wanted to play, I watched for awhile and then went back out into the lobby and chatted up some of the tax assessor clerks (who by then didn’t have much to do). They confirmed my suspicions about really, really needing to do your homework before bidding. One clerk chimed in and told me about a property in Julian that pops up every few years. On paper it looks great. The property looks fairly sizable but it turns out that it’s only large enough to put in a well, or a septic system, but not both. So there’s no way to get permits to build on it. She said that every few years somebody buys it thinking that they’re finally going to build their dream cabin up in Julian, only to discover that they can’t get permits for anything. It’s of no value to any of the neighbors because they know that nobody can build on it, so it goes delinquent and shows back up at auction.
* As for properties getting redeemed right before the sale, what’s happening is that some investor will track down the property owner and say “look, you’re about to lose this property and wind up with nothing. Let’s work out a deal so that at least you can walk away from this thing with something in your pocket.” That actually seems like a better strategy than buying the thing at auction, but it takes pretty big balls to approach somebody like that.
If you go, please report your findings! Would love to hear other perspectives on this process.
