Tax sale season is approaching, and in three weeks or so, Citizens Square will be filled with people bidding on hundreds, if not thousands, of properties that have fallen behind on their property taxes.
If you’ve never been to a tax sale, it can be mind-numbingly dull waiting for particular properties, listed by number and not by address, to come up for a bid.
And if you’re interested in bidding on a property, thinking you can buy a home for a couple of thousand dollars, other bidders can make you feel awfully small. Many of the people who show up have a seemingly endless supply of money to buy properties.
The fact is, though, that few people who show up at these tax sales have any interest in owning a house or piece of real estate. Their hope is that whoever owns the property will decide they don’t want some stranger to end up getting it for a fraction of its value and come forward and pay their taxes – plus 10 percent interest on what the bidder offered at the auction. The interest goes to the bidder.
If a property owner takes more than six months to come forward, that interest rate jumps to 15 percent.
So let’s say someone offers $20,000 for a $60,000 house at the tax sale. They’re betting the owner will come forward and pay that $2,000 in interest to keep the house, or $3,000 if more than six months have passed.
At a time when 10-year Treasury notes are paying only 2.9 percent and mortgage rates are still only about 4 percent – still close to rock bottom, as far as I’m concerned – that’s a pretty good return on your money.
It can be exciting, I suppose, to bid on tax sale properties. I’ve never done it. I don’t have any money.
But this year there are some particularly interesting properties up for auction. Among them are five properties along Dawkins Road in New Haven listed for a few hundred dollars each. And the owner is: the United States of America.
Gad, you think, the United States government is a deadbeat. It hasn’t paid its property taxes, which, by the way, total only about $3,000 in total.