Buffalo is kind of unique in that almost all of my friends here own houses – not the case with my friends in Atlanta or Brooklyn. Housing stock is very, very cheap here. And every year at the end of October, the city sells off a swath of foreclosed real estate at auction, making it relatively cheap, quick and easy to buy a house.
Our new yellow monster! Dare I say… less than $2k? #movetoBuffalo
This year we were interested in properties at auction because my sister and her husband want to fix a house here and then live in it. We are obviously going to help make that happen. K was working, so I was deputized to handle the auction this year. Since we bought our Green Non-Monster directly from the city (city-owned properties don’t go to auction, just properties foreclosured on by the city) and the house we were trying to get before that would have been a private sale (and is now getting torn down… I can’t even talk about it, so sad) this was our first city tax auction experience.
If the auction intrigues you, you need to do some homework. (Ha!) You can start by plugging the spreadsheet data of available properties into a tool like BatchGeo that creates a map. The list of properties is made available on Buffalo’s website a month or two before the auction. You might already be interested in a particular neighborhood, or you might be attracted by a certain house… or a certain price point. Driving or biking around with a house list can be a lot more helpful than cruising Google Street View, but both are fine options – and the Goog’s satellite imagery is a pretty cool tool for seeing the overall layout of the property. (This year, we were looking for a house close to ours, which made things easy.) Sometimes the city will post what properties sold for the year before online, sometimes they don’t.
You’ll need to remember that up until the minute the house is auctioned, the owner can pay the delinquent taxes/water/what have you and get the property removed from auction. So if you’re set on going home with a home, have a list. It’s worth shelling out $5 for the booklet of properties on offer at the auction, because the printed list is in the order the properties will be auctioned (which is not by address) and you can make notes of how much other properties sold for, for future reference. (Many of the houses around us got taken off the list before the auction happened – by auction day, there was only one house left that we were interested in. Luckily, it was our top choice.)
In an ideal world, you’d be able to get into the houses you’re interested in and check out the roof, foundation, plumbing, electric, etc. Since you’re not legally allowed to break into houses that aren’t yours even if they are vacant barring the consent of the homeowner you’ll have to investigate from the outside. Does the roofline look straight? Are there any visible major problems? Does Google satellite view reveal a gaping hole in a flat roof? Are the neighbors’ houses kept up at all, or are the inhabitants glaring at you from the falling down porch of a terrible shack? Do you know anyone who might have been in the house and can tell you more about it? (We were curious about our top choice, a vacant demolition-listed house near us, and found out that a few friends had been able to view it with the owner. We therefore knew it was fixable by us… let’s be honest here, by K.)
The great thing about the tax auction is that all liens etc. are wiped from the property, and you get a clean title. (Theoretically – sometimes the water company isn’t in the loop and assumes you owe the money that the previous owner owed, and it’s a hassle to sort out.) The house we liked best was prohibitive to purchase directly from the previous owner because of the money owed on it, but buying it from the city at auction meant that wouldn’t be a problem.
The sad thing about the auction is that people lose their homes. Sometimes it’s a landlord losing a property that was over-mortgaged or became too much of a handful to keep in good repair and therefore became delinquent on city taxes, or sometimes it’s a family that couldn’t keep up with their water bill. (We felt more comfortable considering properties that were obviously rentals badly needing work or vacant/abandoned. And obviously we lean towards the demolition list…)
Register as a bidder online. There is a nebulous time window in which you can do this before the auction. It saves you some time the morning of, but if you don’t register online you’ll be ok too.
Ride a bike or take the bus. Parking downtown sucks, and the last thing you want to do have to go run out and feed the meter in the middle of hot bidding.
Bring an auction buddy. Someone to hold your seat or place in line if you have to pee, someone to encourage you to keep your paddle up or take it down, someone to feed the parking meter if you went ahead and drove to the auction.
Finally, plan how to pay. You’ll need to put down 20% of the winning bid price or $500, whichever is more. The auction doesn’t accept personal checks, which means you’ll have to arrive bearing money orders, certified checks, or good old fashioned cash. Leaving to get a check/money order and coming back is risky, because the auctioneers take breaks and will re-auction properties that haven’t had the deposit paid by the end of the break. This means that cash is easiest, so there’s a heinous amount of cash on the premises and the building is surrounded by cops on horses and so on. Plan early to take out cash if you have a withdrawal limit.
SO! After you’ve been agonizing over houses for weeks, the big day arrives. Actually, the tax auction is spread over three days. Figure out on which day your houses’ districts will be sold (I’d post a link to wherever this info can be found, but either the city’s haphazard web presence or my own incompetence is interfering) and show up early to get in line for your bidder number, talk to your friends and make sure you won’t be competing for the same property, get a good seat (in the center in the first 10 rows) and calm the stomach butterflies.
I’ve been going to various auctions for a while… first to country auctions to buy furniture and random trinkets for a used furniture store, then to restaurant auctions to outfit my bakery, so I was able to polish my auction savvy with relatively low stakes at first and work up to the expensive/stressful stuff. I was nervous at the housing auction until a few houses went up and I recognized the auction flow, and felt more at home. (Also my auction buddy made SUPER STRONG coffee and I was about to jump out of my chair with the caffeine jitters. Never trust a guy from Alaska with your French press!) If you’re an auction newbie, it might be worth going to a restaurant auction or weekly country auction just to get familiar with the mechanics of auctions. And if you’re thinking about buying a house at auction but aren’t sure if you want to do it yet, go anyway so you can watch how it works.
photo not taken during actual bidding, sorry
Here’s the difference between this and other auctions: the inrem auction is EXTREMELY fast. If the auctioneer doesn’t see you, your bid doesn’t count. He encouraged everyone to yell if he didn’t see their bid… and importantly, once he says SOLD the deal is done. He apologized in advance to people he was going to miss, because it happens.
That all being said, here are my auction tips and as always your mileage may vary. I like to be easy to spot, so big hair or a bright scarf/shirt is nice (I mean, nothing too annoying though.) Always get a good seat. If you don’t, when your properties come up, make sure to maneuver to a spot where the auctioneer can easily see you! Otherwise you will have to do a lot of yelling, or lose out. Make eye contact with the auctioneer when he’s scanning for bids, this somehow helps them remember to check for your bid before closing the item. Ditto when he checks in for your continuing bids, keep that eye contact and nod or something so he thinks of you as a character rather than a paddle and doesn’t forget you’re bidding. Don’t look away from the auctioneer. KEEP YOUR PADDLE UP until you no longer want the house. I saw a few people’s bids get overlooked because the bidding was so fast and they kept putting their paddles up and down at the wrong times. Don’t pay too much for a house just because auctions are exciting – remember that you’re almost definitely going to have to do work on the property, and that’s never free. And don’t buy a house you know nothing about just because it’s $1,000. There just might be a reason nobody’s bidding against you for that one.
The auctioneer lets you know if each property is a house, lot, commercial building, or recommended for demolition. He’s very doom and gloom about demo houses which is JUSTIFIED but also was nice for me because it scared other bidders away from my house. (He made sure to ask whether I really wanted the house before closing the sale, for instance. Obviously doesn’t read the blog.)
Apparently if you buy a house by mistake you can just let them know and they’ll re-auction it after the break, which is weird/cool. Always stick around after breaks, because if you lost out on a house and the winning bidder doesn’t pay the deposit, they’ll auction it again.
OH and turn in your paddle on the way out or they’ll charge you $20.
OK so you bought a house! What now? You can’t legally go in the house until they mail you a deed. The sooner you pay in full, the sooner you get it – but it’ll still take over a month. I’m not going to tell you to break into your new house and check it out because I know a guy who got arrested for doing that: even though he’d bought it, he didn’t have the deed yet, so he didn’t technically own it. However, I also know folks who had pipes burst in a house they bought and the water froze and caused a lot of damage, and they didn’t know and couldn’t do anything because they were obeying the law. You also can’t collect rent until you get the deed… I would obviously double check that info with your official documentation before relying on it.
If you bought a demolition-list house like we did, you’ll have to get the demolition halted or you just paid too much for a vacant lot. Go to City Hall. They tell you to check with the law office – they didn’t seem to know much about the matter, but start there anyway. I went to the demolition office on the third floor next, where a helpful guy looked up our new house and found out that the demolition order wasn’t court ordered. If it is court ordered, you need to get the judge that signed the original order to rescind it – and you need to set this process in motion within 10 days. Luckily our situation just involved walking across the hall and talking to another guy, and then emailing a City lawyer.
does your City Hall have one of these and are you allowed to just wander into it?
(While you’re at City Hall, check out the Common Council chambers on the 13th floor and the observation deck at the very top!)
Once you’ve got that deed, you have to fix the existing code violations within a window of time, and there are measures in place to keep you from immediately flipping the house for significant profit. Don’t do that anyway though.
Today is the last day of the 2013 Buffalo inrem auction. Good luck to all bidding! If you missed it, you have a year to get your ducks in a row for 2014.
We’re excited to start work on the new place – it was too beautiful to watch it be demolished, and it means one of my favorite people on the planet will be living around the corner. Hopefully soon we’ll be able to get in there. In the meantime, the green one is looking better and better with every passing day.
“A hammer and nail and a coat of pail will make a house look new if it sure as heck ain’t.” – Gandhi