Real Estate 101: Do Your Research Before Bidding at a County Tax Sale

Travis courthouse 2011” by Larry D. Moore – © 2011 Larry D. Moore. Licensed under CC BY-SA 3.0 via Wikimedia Commons.

The dark-haired man wearing thick-framed glasses and a beret-style hat had just missed his chance.

“That concludes the sale,” a deputy constable told the crowd of about 100 people milling around in the cold outside the Travis County Courthouse.

No one had even bid on the foreclosed property.

“$10,000,” the dark-haired man said, clearing his throat.

“The sale is over,” the constable told him.

“But I didn’t even have a chance,” said the dark-haired man, generating some sympathy from fellow auction-goers.

The constable conferred with the deputy district attorney, who was wearing a Boston Red Sox hat and quietly observing the auction from the small, elevated stage at the edge of the courthouse. The attorney apparently thought the county would be better suited to reopen the bids, make a sale and collect the cash rather than hang onto a property.

“$10,000,” said the dark-haired man, holding up his B21 auction card.

Then emerged the man holding A9. “$10,200,” he said.

Back and forth the two men went. A third jumped in briefly with a bid.

Glances were exchanged — more curiosity than intimidation.

The price climbed quickly to $11,000.

“$11,800,” said the dark-haired man. “For the unbuildable lot next to my house.”

The crowd of about 100 people gathered for the monthly Travis County tax sales had been moderately interested in the bidding, but they took more interest as this seemingly unusable lot sparked a bidding war.

The county, like most across the nation, holds regular auctions for properties that owners can’t afford to keep paying the taxes on. (Separate bank foreclosure auctions take place just a few feet away by agencies such as The county publishes the auction properties 21 days before an Auction in the Austin Chronicle.

The auctions are held on the west steps of the Travis County Courthouse at 1000 Guadalupe St. on the first Tuesday of each month.

For the dark-haired man holding the B21 card, it was his first auction.

He said he wanted to buy the 13-foot-wide vacant lot between his house and another house that had been recently built. He said it’s an overgrown, unusable lot that’s mostly just a place his dog sniffs around each day. And, he said, it has drainage issues.

But his bid on the property drew interest. And another man kept bidding until the dark-haired man gave up at $12,300.

When the bid winner went to the tax specialists to secure the property — which must be done in cash or with a cashier check — he learned the lot is essentially useless and that he may owe about $1,200 in taxes a year for that apparently useless strip of land.

It has an old Live Oak tree that can’t be removed without a variance approved by the city, an unlikely scenario, the tax specialist told the bid winner.

So the bid winner briefly consulted with the dark-haired man, suggesting he might sell the man the property after all.

County auctions are often thought of as an opportunity to buy up properties at rock bottom prices. This is sometimes true. But the huge disclaimer, aired by county officials before the auction and by property investors, is that you better do a lot of research before you decide to place a bid.

The properties are sold as-is. And even in a red hot real estate market like Austin’s, not every piece of land is poised for a strong return on investment.

If you don’t do the proper research, you could end up with swampland, an unimproved lot that used to have a mobile home or worse. There are, however, well-maintained homes that could provide strong resale as well.

But with hundreds of bidders, it takes a special eye and some experience to get a great deal.

An East Austin property went up with an opening minimum bid of $9,000.

“$15,000,” one man said, holding up his B17 card.

“$20,000,” another man said.

About five people ended up bidding along with the two men. The price climbed and climbed and climbed, often with one bidder outbidding the other by the minimum increment of $100.

After about a half hour of back and forth, the price reached $145,100 as two bidders grinned at each other, apparently each realizing the futility of upping the other by $100 only to be topped by another $100 increase.

In the end, the $9,000 minimum bid house sold for $151,300.

It’s 2013 valuation was $150,000 for the unimproved land. It had $4,942 in unpaid taxes.