Trustee's, tax sales offer opportunities, risks
Feb. 12, 2017 at 11:37 p.m.
Lateefah Pruitt has been a real estate agent for 10 years, and during the past five years, she has diversified her business by bidding on properties at trustee's sales at the Gregg County Courthouse.
"I do it for myself," said Pruitt of Longview, who also showed up Tuesday morning with investor client Simon He.
She said she can find good deals at trustee's sales, in which investors bid on bank-owned homes that the former owners lost through foreclosures.
She said she, in turn, sells or rents the properties she buys.
"I have a property I am interested in," Pruitt said. "I have one I am willing to buy and my client is willing to buy."
However, she found out a house that she was interested in buying had been marked off by the auction company, www.auction.com of Irvine, California.
While Pruitt said she thinks trustee's and separate tax sales conducted on the same day and location offer good investment opportunities, another investor who showed up Tuesday, Craig Nichols, said they come with "a lot of risks."
Nichols of Casa Tuya Investments in Longview, said a major risk is not knowing the inside condition of a house, because would-be bidders are not allowed to enter the homes until after they buy them.
Would-be bidders may obtain addresses in advance of the sales and look at the outside of the properties.
Nichols said he learned after buying a home for $66,000 a year ago that it had flood damage.
Even so, Nichols said he has attended the sales since 2003 and bought four properties at this week's sale.
"That's how I acquire most of my properties," he said.
Nichols, Pruitt and others hung around for the tax sale immediately outside the courthouse and the trustee's sale on the courthouse steps. As many as 40 people showed up Tuesday morning.
At the trustee's sale, auctioneer Aurora Campos read the terms and conditions and accepted bids.
Auction.com sought bids for 12 homes throughout the day and averages one to two sales per monthly auction, said Andrew Pierce, the company's coordinator.
Pierce, who lives in Texarkana and travels throughout the state conducting the sales, said auction.com sold only one home within an hour after the 10 a.m. start of the event. It scheduled the second session at 1 p.m.
Bids started at $65,000 for the house, and the winner bought it for $98,500, Pierce said.
Opening bids ranged from $40,000 to $240,000 for the trustee's sale, Pruitt said. She said she brought a number of cashier's checks to the auction.
The bids tend to be a lot lower for the tax sales because they do not cover the value of the properties. They started at as low as $15,000, said Lt. Bill Drennan of the Gregg County Sheriff's Office, which conducts the tax sales.
Drennan said the successful bidders cover delinquent taxes, court costs and other fees.
Properties face tax sales if the owners fall at least a year behind in paying their taxes, said Staci Killingsworth, attorney for Longview law firm Linebarger Goggan Blair & Sampson.
Her firm represents several taxing agencies, including Kilgore ISD and the city of Longview.
However, Drennan said, "I have seen some properties that were five years delinquent."
If property owners fall at least a year behind, the jurisdictions start the process of the tax sales by filing a lawsuit against the delinquent property owner, Drennan said. If the owners do not respond within a month, the jurisdictions seek a judgment to gain possession of the properties and schedule them for a tax sale, usually within six months.
However, Drennan said delinquent property owners may reclaim their properties by buying them back by 10 a.m. on the day of the tax sales.
The tax sale Tuesday involved 10 properties, five of which were sold, Drennan said. If no one bids, the properties are put back in trustee with the taxing agencies setting them for resale at future tax sales.