Tax Sale 2005This is a later than usual post as I was at the first day of the District of Columbia's Tax Sale, which attracts the financially and reality savvy and idiots. I missed the initial reading of the rules around 8:30AM as I arrived a little late because I wanted to add a little something to my initial deposit. No matter, the auctioneer wound up repeating several times the main rules.
Rule #1- Turn off your cell phone and pagers. You are not that important.
Rule #2- You must have 20% of your bid already deposited with the cashier's office.
Rule #3- No children and don't leave your children out in the hallway.
Yes, people did leave their children in the hallways. At least two kids. One kid was brought up where the auctioneer was and asked to find mommy or daddy.
Rule #2 was also constantly broken, and what would happen was the property tax lien would come back on the auction block. That's what happened when I bid against the King of the Idiots. He got the bid about $1,000 more than what I was willing to go for and apparently he didn't have the 20% of the $3,000 needed so the property went up again and I was outbid by $6,000.
As I said the savvy and idiots, lots of idiots.
Idiots come because they are betting on getting a property for cheap. Nope. There is a 5% chance that the property would go into foreclosure and that the pre-existing bank loan and other debts, that would need to be paid, are not burdensome.
The savvy are betting on the 95% who will pay off their taxes and the 18% interest property owners would have to pay on the back taxes. I sat near two folks who had their charts and research out. One guy had the figure of how much he could bid on top of taxes owed (which gains interest) and the surplus (the bid amount that does not gain interest) to get back at least 2% interest on the whole bid. Another person had property descriptions and I guess bid limits to get a decent return. It helps to do research on the property.
Most bids for tax liens on properties in the Truxton area were about $5,000 to $20,000 over the amount of back taxes owed. Very few were at the amount of the taxes owed with only one person bidding. Like 0521-0807 1533 4th St, which I think is part of the parking lot of the mosque.
Once all the Truxton properties were bid on I left as I learned from my last time at auction not to bid angry. So I choose not to bid. Well at least on properties I have not done a little research on.