I went to the Monroe County PA ‘Judicial’ Tax Sale this past week. Many counties in Pennsylvania have 2 tax sales. The ‘Upset’ tax sale – which is usually held in the fall and the ‘Judicial’ tax that is held some time afterward, usually in the spring. If you purchase a property in the Upset tax sale, you are responsible for any liens or judgments on the property, but if you purchase a property in the Judicial tax sale, those properties are sold ‘free and clear’ of liens and judgments. There are some liens however that will remain on a property purchased in this tax sale. Any municipal, state, or other government lien will remain. Everything else, as long as proper notification has been made will be wiped out by the tax sale.
And here is another benefit of purchasing a property at the Judicial tax sale as opposed the the Upset tax sale – the minimum bid is reduced to just the cost of the sale. This varies for each property, but for most properties it is under $1000. All the back taxes have been forgiven for these properties. Just because the bidding starts low, doesn’t mean you can pick up a property for pennies on the dollar though.
I was interested in a few building lots that were in the sale. The lots that I was interested in were paid off right before the sale, so I didn’t even get a chance to bid. And any other properties that I was interested in also paid off before the sale. I made 2 errors when preparing to go to this tax sale that I warn everyone else about, but I failed to head my own advice. The first is to pick out a lot of properties because almost all of the really good ones will be paid off before the tax sale. There were quite a few other building lots in another township, from another builder that went up for sale. But I did not do my due diligence on these lots, so I didn’t bid on them.
The second mistake I made was in underestimating the competition and not bringing enough money with me. Most of the building lots that did sell went for over $5000, some of them sold for over $10,000. These lots were not as nice as the ones that I was looking at. If the lots I was interested in were auctioned, they would have went for over $10,000, and I was not prepared to spend that much per lot.
There were some deals that were made at this sale, but not what most people who have no experience at deed sales expect. One house that I had looked at; which really is falling down, does not have a roof, has been vandalized and needs to be demolished sold for $39,000. The house is on a 7 acre parcel of land on a partially paved road. Not a great deal for the average person, but for someone who builds houses and knows how to get the demolition, clearing and building done, it’s a buy. Most of us would have to put a lot more money and time into a deal like this before seeing any profit.
There were a lot of properties that didn’t sell, most of them were unbuildable land and trailers. I didn’t do due diligence for all the properties in the sale, so I can’t tell you if there was anything good left over. Judging from the competition that was there – I doubt it. I did go look at some vacant lots that didn’t sell and found that they were all unbuildable lots with steep inclines or drop offs. Since there were at least three builders there bidding up the other lots, I didn’t really expect that any good ones would be left over.
By Joanne June 8, 2013 - 7:53 am
Hi Frank,
It is true that each county can do things a little differently inside of what the law allows, and sometimes it seems to me that they even stretch the law when it serves their purpose. Remember in the Judicial tax sale the property is sold for the cost of the sale, not the back taxes, and the county does not get the overbid. So they are more then willing to take payment if it comes in before the property is actually sold at the tax sale. I’m not sure what happens after the property goes to the repository list. In that case the property is now deeded to the county, but I don’t see they wouldn’t want all those back taxes. You could check with a PA attorney who is familiar with real estate and tax sale laws to find out if a property can be redeemed from the repository list or not.
By Frank L June 8, 2013 - 7:01 am
I have been following the Monroe Judicial sale since I was preparing to possibly buy a property starting in April. I researched about 20 properties and had been trying to contact previous owners. I took about 30 pictures and also saw a bunch of properties redeemed before the sale. I am surprised to hear Shawn Hobbs comment about redeeming the property during the sale the reason being that I called the Open records officer to find out when a property I was looking at could be redeemed (final deadline) and he told me it was up until Friday May 31,2013. That didn’t allow me enough time so I stopped at that point. According to the RETSL a property can be redeemed any time before the sale but the law is ambiguous and it appears that the counties all have different deadlines. Some are 24 hours before the sale, some up to 1 hour before the sale etc. Also “unclear” is the fact that if the property is at the Judicial sale it failed to sell at the Upset sale. But since the back taxes were not paid prior to the Upset sale the owner can still pay prior to the Judicial sale. So does this mean that if the property didn’t sell at the Judicial sale and is now in the repository that the owner can still redeem it or is it lost after the judicial sale?? Just food for thought. I am in constant contact with 64 Pa counties learning about each one policies / procedures for Tax sales, RETSL. It is quite different in each one but they all must follow the RETSL. Hope to meet both of you somehwere along the “Sale Way”. Frank L.
By Shawn Hobbs June 7, 2013 - 4:57 pm
Hi Joanne,
It was great seeing you at the auction. I was happy with the purchases I made: A 3bd 1bth Modular for $5500. It is in move-in-ready condition (very rare for trailers/modulars). Received comps prior and my business partner and I are set to make a nice profit from either renting or flipping it.
The second property a 3bd 1bth house, bought for $2500 is in horrible condition. However, it is on a main street, with a bus stop and post office at the corner. Met the neighbors and it should not take a tremendous amount of money to repair, which should leave us with a small enough profit at the end.
Biggest surprise for me was the Tax Claim Bureau allowing payment of back taxes during the auction. That didn’t happen last year. The result this year was the striking off of many desirable parcels that many had assumed would be up for bid.
Once again, it was great seeing you. I’m headed to Berks later this month, then Luzerne. Hope to see you there.
By Joanne June 8, 2013 - 7:46 am
Hi Shawn,
It was good seeing you at the sale and getting a chance to talk again. Thanks for sharing your success at the tax sale. It really goes to show investors that if you pick a niche that everybody else isn’t after, AND you do your homework, you can be very successful at this business. You may not make a killing, as some of the infomercials suggest, but you can make a decent profit.