For the last few years I've been going to the Snohomish county tax foreclosure auction, held each year in January. I've written about it in the past, in 2008 and in 2009. These auctions are held in accordance with
I go to these auctions because it's a chance to pick up land at a pretty much rock-bottom price. There's some complications, and you can get burned, and the land is offered without any guarantee, and the land itself may have no or very limited use,so if you do go to one of these auctions and buy land, be aware. Talk to a good attorney about the risks, and make sure that attorney knows what they're talking about.
The rules of the auction are pretty simple: As-is, as each parcel is auctioned you've got to pay cash or cashiers check, there are some ways that the previous owner can get the property back (consult an attorney if you're curious, but they're all unlikely) and Kirk Sievers kinda sucks as an auctioneer, but you get used to him*.
I purchased the property that I'm currently grazing my cows on for $2k/acre in the 2008 auction; in fact, usually I'll purchase bare land because it's what I know best. This year I bought a building lot and a townhouse, which is a departure for me.
I think that we're at a point where most folks think that owning real estate is like having a rabid dog, and that sort of pessimism really interests me. Western Washington is still growing fast -- we issue 16,000 new drivers licenses each month, and those folks have got to live somewhere.
The townhouse is 3br, 2.5 baths, 2,000 square feet. Constructed in 2005, it's relatively new. It sold for 165k in 2005, and then sold for $243k in 2007. What's a fair price for it now? whatever the market will bear. I purchased it for 101k, roughly 43% of the market price 3 years ago. About $50 a square foot. Other properties in the area are selling for an average of $133/sq foot, so I figure i got a good deal. If you think you're positive on your own home mortgage, you might want to look at these numbers. This house sold for 40% of what it was worth 3 years ago.
Now this is the kinda touchy part. Prior to the sale you don't have any right to see or inspect the property in question. For the most part, you're buying blind, and the pricing reflects that risk. In this case the inside looks pretty good. Heres some pictures from the townhouse i purchased earlier today, taken today.
small but serviceable kitchen
3rd bedroom with attached bath.
You can tell from the pictures that the previous owner, a mortgage broker, really hasn't made any attempt to pack or move. He's living in this townhouse with his wife and 86 year old mother. Since this property was lost to foreclosure, I'm sure that he's not paid his mortgage in a very long while. If you don't have rent or a mortgage to pay, you can get used to having that extra money. Mortgage is usually the single largest budget item. So I'm not sure what I'll do with this fellow. I'll talk to him on Monday and see if we can work out a plan; but as I said to him today "hey, your credit isn't very good with me; you haven't paid your mortgage, and as a landlord, that's pretty much the worst sort of debt to not pay. Lets talk on Monday. "
* Kirk needs to wait longer after a bid to see if there are other bids. He's often too quick to call "Sold" and people debating bidding more are cut off. I've learned to bid loudly and quickly; I've been trained.