Common county tax auction errors

We’re getting ready for the upcoming real estate tax auction here in St. Joseph County, Indiana, and it occurred to me to make mention of some of the more common errors that beginning tax auction investors make. As I outlined in my book, “Learning to play the real estate tax auction game” (available at Amazon.com) the most common error is misunderstanding the nature of the game. When you go to the tax auction, you’re not buying a piece of real estate, you’re buying a lien on a piece of real estate. Now the rules differ from state to state, but here, you need to wait for a year before you can actually exercise that lien and gain title to the property. That means that after you win the auction, you have to sit on the lien for that period of time, and you’re not allowed to do anything to the property, or even enter it, until the time period has elapsed and you have been given title by the circuit court judge. The reasons are obvious–if you enter the property and do repairs, then in the meantime, the original owner steps up and pays the back taxes, you’re out all the time and money you spent on those repairs.

Another common error is confusion over addresses. The list published by the county includes all sorts of properties, including vacant lots. Now in many cases, the property description will actually say “vacant lot” on it, so it’s obvious–but it’s not always so obvious. There are plenty of cases where the tax records indicate that there is a house there, but in reality, it has since burned down or been demolished, and all that’s left is a vacant lot. And what’s even more confusing is that the address listed may be a vacant lot next to a house of the same address. The only way to make sure you’re not getting a vacant lot is to check the local GIS records online, assuming they’re available. Look to see exactly where the key number plot is located–make sure it’s the house you think you’re bidding on, and not the vacant lot next door to it.