Real Estate 101: How to Evaluate County Tax Auction Properties

It’s tempting. Very tempting.

Scan the listings of tax foreclosures on the Travis County website — or those of most counties across the nation — and you’re likely to find something of a fire sale on strips of land, abandoned houses and properties that, at a glance, look like a steal.

Here’s one now: A somewhat rough looking two-story home that backs up to Williamson Creek on a tucked away street in southeast Austin. It had a 2012 valuation (which is typically lower than the market price) of $113,000 and an opening bid of $19,597.

A piece of land larger than a picnic blanket for under $20,000 in Austin? What a deal, right?

Maybe. But only if you take time to understand the auction process and find ways to avoid the daunting list of potential pitfalls that comes along with bidding on a property that the county is auctioning off because the prior owners failed to pay their taxes.

About 50 people stood outside the Travis County Courthouse on the cold December morning that this home on Williamson Creek was up for bid. But it, like one of the other three properties listed as up for auction, was pulled shortly before county officials could start taking bids — a move likely spurred by the prior owner paying off the back taxes.

So, that’s one simple pitfall. Often, properties listed for auction never get to take a single bid. But that’s probably the least stressful of possible problems — because it only costs you time, not money.

Let’s delve deeper into some of the baseline questions and actions you may want to consider before racing down to the courthouse with a handful of cashier’s checks.

Buyer Beware

The county warns people at the auction on paper and out loud about the potential pains of buying one of the auction properties.

It reads, in part: “There are no warranties, expressed or implied, including but not limited to the implied warranties of merchantability and fitness for a particular purpose. You buy the property “as is.” Ad valorem taxes, penalties, interests, costs, and expenses that have accrued subsequent to the judgment may be currently due and become the responsibility of the purchaser. If you have any questions, consult your legal counsel prior to bidding.”

So, lets unpack that.

The county is warning you that it can’t make any promises about the condition of the property. That means that if there’s a home on the land, it may be falling apart. If it’s only land, it may not be zoned to build on. (See our prior post about a man who bought a property that he hadn’t investigated.)

Next, the county talks about ad valorem taxes. Generally, those are other types of property taxes owed beyond the county’s portion. That may include taxes owed to school districts, cities or other taxing entities.

While determining how those additional debts may impact your purchase decision could be complicated. But finding out the basics of what is owed typically requires only a review of the county’s lawsuit against whoever is losing the property because of delinquent taxes.

That research starts at the Travis County Tax Office. They’ve created a simple guide to fill out that will expedite your research. The Travis County District Clerk’s Office houses additional information about non-tax liens.

Some experienced bidders create their own spreadsheets and checklists to evaluate each property listed for auction and ensure they’ve identified all potential issues.

A good starting point is simply driving by the property you’re interested in. Entering the property could result in a trespassing charge or worse — so the county warns people to explore properties at their own risk.

Unless you’re lucky and find the property owner or someone to let you in, it may be difficult to get inside and even get a general idea of the property’s condition.

Next, you’ll want to try to find some way to see the interior of any home you plan to purchase and have the property inspected, which can prove difficult, or impossible, in many cases.

While those steps will help you determine if you want the property, the next steps are ensuring you understand what the property is truly worth, learning how to bid and what happens after you place a winning bid. We’ll tackle those topics in-depth in a future blog post.