Sheriff's sale auction for tax delinquency in Ohio

[theoverlook]

There's a property I'm interested in coming up in the Franklin County, Ohio Sheriff real estate foreclosure auction. I've bid on properties in the past but they were traditional bank foreclosures, not tax auctions. My question is, does anyone know how these auctions work in Ohio? The property is mixed in with the usual bank foreclosures, and my hope is that when you bid on it you're bidding on purchasing the property and not the tax delinquency. IE, I don't want to buy the debt, I want the real estate. As far as I can tell, that's the case here, and the prior owners get a chance to redeem the property by paying the property tax bill prior to the actual finalizing of the sale. This is the actual auction information page:

https://franklin.sheriffsaleauction.ohio.gov/index.cfm

And the Sheriff's page on the auctions:

https://sheriff.franklincountyohio.gov/Services/Real-Estate-Sales

There's just not a lot of great info as far as the difference between a bank foreclosure and a tax foreclosure.

[SunnyDays]

I’m not in Ohio, but I’m pretty sure that mortgage and tax delinquency are simply the reasons that properties get sold by auction.  The money owed is recouped by the bank/municipality or city from the sale price.  The new owner is not expected to pay the taxes on top of the price for the property.  That’s why such properties can be a great deal - there is no motivation for the owee to get top dollar, but just enough to cover their dollar loss.  You biggest worry will be other bidders who also want a good deal - you can end up being bid up by other eager people.

[Sibley]

Not Ohio specific knowledge, but in another state the way it works is the purchase price goes towards paying the delinquent taxes/penalties/interest, and any left over then goes to the prior owner (or mortgager). I don't remember how it worked if the auction price didn't cover the taxes.

Realistically, if the delinquent taxes are less than market value, you win.

[Fishindude]

Not familiar with OH, but I have bought a couple properties in IN at Sheriff sale as recently as a couple years ago.   These are typically foreclosures and there will usually be a judgement against the property from the bank, amount is typically listed in the public advertisement.   If the bank thinks they can sell the property at a decent profit above what they are owed (the judgement amount), they will often have a representative at the sale and bid on it, take possession, then clean it up and sell it.   If the property is in poor shape, the banks often don't see that they will ever get anything $$ back worth their while, so they will let it go to the highest bidder at sale.   I bought our last one for $1 over the judgement amount.

If you are the winning bidder, you will then have XX days to pay the county and get title on the property.  If you need to borrow money, you will want to line that all up in advance, because the required payoff time is pretty quick.   You will also be responsible to get any delinquent taxes paid current.   It's wise to spend a little $$ and have a local title company do a title search ahead of time to make sure there are no other judgements against the property, as you would inherit those when you take title.

Complete different deal from a tax sale.   On tax sale it is there because taxes are long overdue.   You bid on the property, and pay the taxes current right away.   The original owner typically then has 12-24 months to get caught up on the taxes before you would take possession.   If they get the taxes caught up and pay you and the county some small fees and interest, they get their property back.   If they don't it get's deeded over to you.   

Usually someone at the sheriffs office and / or the county recorder or assessor can explain pretty clearly how all of this works.   Your local title company is also a good resource to learn the ropes.

Good luck !

[economista]

My grandparents bought a house this way in Wood County, OH. They purchased a house that was being sold due to property tax delinquency and only paid $14k for a house that should have been valued for around $100k. This was around 10 years ago.

One thing to keep in mind is to get a good inspection after to see what work you need to do. Usually houses sold this way have been neglected for a number of years, so they need a lot of work. In our case my grandparents bought it for my mom, who didn’t do any work or have it inspected, and around a year later after my sister consistently was getting sick they found a gas leak under the house. Just do your due diligence and be prepared for a lot of cleaning to make sure the house is safe.

Oh, I just remembered one more thing - the previous owners didn’t have home owners insurance either, so since the house had been uninsured for so long my mom couldn’t find anyone who would insure it for less than $13k per year. Most of the companies flat out refused to insure the house but one said yes, for that exorbitant rate.

[Fishindude]

One thing to keep in mind is to get a good inspection after to see what work you need to do. Usually houses sold this way have been neglected for a number of years, so they need a lot of work. In our case my grandparents bought it for my mom, who didn’t do any work or have it inspected, and around a year later after my sister consistently was getting sick they found a gas leak under the house. Just do your due diligence and be prepared for a lot of cleaning to make sure the house is safe.

You are correct about them usually being in poor condition.  I bulldozed two of the houses we bought at sheriff sale.   Wanted them for the land and because they were adjacent to our existing property.

[Papa bear]

I’ve been to the Franklin county auction a handful of times.  Was a waste of my time, really.  Went to bid on a couple places, cashiers check in hand ready to roll, only to have the properties pulled off that morning.  Had to sit through the entire thing to find out. Happened a couple of times like that. 

Anyway, to your specific question, I don’t recall the tax auction differences.  Good luck and I’d be interested in hearing an update.


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[theoverlook]

Your local title company is also a good resource to learn the ropes.

Good luck !

This was good advice - I spoke with someone that's handled several closings for me and he had good input. I'm going to have him do a title search on the property I'm interested in and give it a go if it comes back clean. I'm hoping to use the margin loan "bridge" method that Mr Money Mustache used for a real estate deal, then refinance if needed. That way I avoid liquidating stocks and paying taxes on them. It may end up a rental or may end up fixed up for sale, depending on condition and purchase price.

@Papa bear : Yeah, they pull a whole lot of them due to bankruptcy, redemption, etc. I've been to a couple of the in person auctions, but they're all online now so I don't need to make a morning of it.

I'll let you all know how it works out.

[sonofsven]

I've bid on a few online auctions in the last few years but didn't win any, I was low balling, basically. All the properties had significant issues you'd only know about if one were to inspect them on the ground, and I suspect other bidders were not doing this.
It felt a little sketchy. On more than one occasion the bidding "ended" with me in what I thought was the winning position only to find that the auction had been extended for hours,  days, or weeks.
Back in the dark ages I worked for a guy that bought property "on the courthouse steps", it was wild. Lots of last minute shenanigans . I would drive by all the properties he was bidding on the morning of the auction. One of them burned to the ground overnight. At the auction this was not widely known, apparently, since the bidding went on without a hitch. Buyer beware, you just bought a smoldering ruin.

[theoverlook]

It turns out the title company I use can do a full title search for $150. I figured that was cheap insurance to make sure all the lienholders have been properly notified and that I will have clear title if I "win" the bid.

[Fishindude]

It turns out the title company I use can do a full title search for $150. I figured that was cheap insurance to make sure all the lienholders have been properly notified and that I will have clear title if I "win" the bid.

This is the best insurance you can get to avoid surprises.   They can't find everything, and they will make no guarantees, but they will find most.

[Jon Bon]

There's a property I'm interested in coming up in the Franklin County, Ohio Sheriff real estate foreclosure auction. I've bid on properties in the past but they were traditional bank foreclosures, not tax auctions. My question is, does anyone know how these auctions work in Ohio? The property is mixed in with the usual bank foreclosures, and my hope is that when you bid on it you're bidding on purchasing the property and not the tax delinquency. IE, I don't want to buy the debt, I want the real estate. As far as I can tell, that's the case here, and the prior owners get a chance to redeem the property by paying the property tax bill prior to the actual finalizing of the sale. This is the actual auction information page:

https://franklin.sheriffsaleauction.ohio.gov/index.cfm

And the Sheriff's page on the auctions:

https://sheriff.franklincountyohio.gov/Services/Real-Estate-Sales

There's just not a lot of great info as far as the difference between a bank foreclosure and a tax foreclosure.

Hi neighbor!

Looks like the process has changed a good bit since I was there last. It used to be completely in person. When I looked into this 99% of the houses were trash, they owed more then they were worth. So in those cases it is almost always the banks buying them. I think 2 or 3 of their representatives sat in the front and bought nearly all the houses to limit their losses. If you are not paying your taxes you are likely not paying your mortgage either. So the banks almost always bid them up to a point and occasionally an investor would jump in and get it over the banks reserve price and could buy the house.

So for the few that were decent they almost never went to auction. Either they found the money, or could make a sale to an investor before the sheriff sale, something usually happened to the houses with value left in them before the auction itself.

However what is your goal here? Investment property or a place to live? Save a few dollars? Its just a ton of risk buying a house sight unseen like this. Id definitely reach out to the title agency and see if the know someone you can partner with and who has done this before. I would assume there would be some cost, but much better then you over paying for a house that has all the copper wiring stolen out of it!

[theoverlook]

@Jon Bon : Hello to you too neighbor! Amazingly enough the title agency found no mortgage on the property. They did find years and years of unpaid property taxes that had been bundled up and sold to a tax lien buyer a total of four times, so they have quite a significant debt built up. It's a nice property in a nice area, and driving by it looks occupied and in good condition.

My goal is an investment property. Plan would be to buy, renovate, maybe hold long enough to avoid short term capital gains, and resell. Alternative would be to refinance and rent it out, depending on our appetite for residential real estate landlording at that time. (My main "job" is as a commercial landlord, no residential at this time.)

[Jon Bon]

That is a strange one. Weird that the house can be taken care of but cant bother to pay property tax? Good idea getting title company involved.

There is a good chance it never makes the auction. Find out who the owner is and maybe have a friendly conversation? If you don't do it I imagine someone else will soon!

No idea of course but that is my gut. I still feel like there other are OK deals ok there. I mean not great, but ones with less risk then a sheriff sales. YMMV good luck, and let us know how it turns out.

[theoverlook]

There is a good chance it never makes the auction. Find out who the owner is and maybe have a friendly conversation? If you don't do it I imagine someone else will soon!

I agree it's strange that they aren't paying property taxes. I made the mistake of doing some poking around and found the owners on Facebook and it appears they still live in the house and have kids. Evicting a family from their house isn't up there on my list of favorite ideas. I have been tempted to do what you suggest, just knock on the door and see if they would talk about it. It also might be a bit of a hot button issue so I can imagine a lot of ways it could go wrong.

I wonder if they're sovereign citizen types and getting them out of the house would be a 15 year battle. I imagine a lot of "am I being detained?"

[Fishindude]

Going delinquent on taxes is a planned strategy for some.  They wait till the last minute before getting kicked out, then hustle down and pay current.   Often repeating the cycle again.

[Cranky]

What happens in NE Ohio a lot is that the old people die and the young people don’t want the house because they’ve moved away. The house isn’t worth much and it’s a lot of trouble to rent it out.

So nobody pays the property taxes and eventually it goes up for auction or the land bank buys it.

[theoverlook]

And to close this particular property out, it was withdrawn this morning, just prior to tomorrow's auction. Maybe someone had that friendly conversation that was suggested.

[theoverlook]

And in a further update, it now shows on the county auditor's page as having been sold to an LLC (that features the last name of a realtor) for $127k, which is about half what I would have bid on it. I imagine the buyer also settled the tax debt as part of the purchase, which was about $60k.

[Fishindude]

And in a further update, it now shows on the county auditor's page as having been sold to an LLC (that features the last name of a realtor) for $127k, which is about half what I would have bid on it. I imagine the buyer also settled the tax debt as part of the purchase, which was about $60k.

You can always try to approach the new owner and make an offer that would be profitable to them.