DETROIT
08/09/2013 08:32 am ET

Detroit Foreclosure Auction: All The Basics You Need To Know Before You Bid On Property

AP

This post comes to us courtesy of Loveland Technologies, which created the Detroit property and foreclosure mapping and data resource, Why Don't We Own This?

18,910 Detroit properties owing more than $265 million in unpaid property taxes are careering towards this year’s Wayne County Tax Foreclosure Auction.

At Loveland Technologies, we are geared up to keep you informed on everything auction. You can connect with resources on foreclosure prevention, research properties, and talk to the Detroit and auction community on Why Don’t We Own This?

If you’d like to ask us questions about the auction, email Loveland Technologies and we’ll do what we can to provide an answer.

A brief introduction for newcomers:

Every year, the Wayne County Treasurer forecloses on properties in Wayne County that have not paid property taxes in three years. In an effort to recoup unpaid taxes, a foreclosure auction is held where these properties are auctioned off in two rounds. In the first round, properties are auctioned for the total amount of back taxes owed. In the second round, the opening bid on all properties is $500.

Last year, 20,041 Detroit properties went to auction. 703 properties sold in the first round, and 11,831 sold in the second (county wide). 7,920 Detroit properties did not sell even for a minimum bid of $500.

The numbers:

18,910: Properties foreclosed in Detroit and headed to foreclosure

11,502: Properties conditionally withheld from foreclosure so long as they continue to make payments towards their payment plan.

3,524: Properties redeemed and no longer at risk of foreclosure.

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33,936: Total properties affected.

Auction Dates:

Dates are still preliminary, but they should look something like this:

For the first round of the auction, property information is released, and registration begins, August 20 and runs through September 13. Bidding begins September 4 and bids close from September 23 - 26. So, yes, registration will still be open as the auction begins.

Second round registration runs September 30 - October 11, with bidding open from October 8 - October 21 to the 25th. Final property information should be available October 3.

What’s happening right now:

We are currently in the “right of refusal” phase for cities in Wayne County. This is when cities have the opportunity to buy properties that are headed to auction for the amount owed in back taxes. Given the bankruptcy, I don’t think we should expect Detroit to buy anything.

Who’s handling the auction:

Realauction.com will service this year’s foreclosure auction. In solidarity with Detroit, Realauction filed for Chapter 11 bankruptcy protection on July 31 (kidding about the solidarity part, serious about the bankruptcy part…).

Realauction was entangled in a patent infringement lawsuit by online government auction behemoth, Grant Street Group, earlier this year. The court found that Realauction had willfully infringed on Grant Street Group’s patent and awarded Grant Street Group $8.1 million in damages. On July 31, instead of paying a court-ordered first payment of $4.3 million, Realauction filed for bankruptcy protection.

This shouldn’t affect Realauction’s ability to service the Wayne County Tax Foreclosure Auction.

Preventing Foreclosure:

Until right of refusal for cities concludes, preventing foreclosure for properties at risk this year is on hold. There will be another window of opportunity after the right of refusal period.

Registration and Bidding:

The deposit to bid is the same as last year: $535 for one property, $5,035 for multiple properties. One significant difference in bidding is that there will be no jump bidding this year. This means that you cannot bid beyond the $100 bid increment (i.e., see a property at $5,000 and “jump bid” to $15,000). You can still set your maximum bid, which will be moved to incrementally.

Public Service Announcement:

We do our best to keep information like this fresh and up to date, but there are still things that are missed, old, or just plain wrong. If you see any of that, let us know. We will change it! You can contact Loveland Technologies by email.

The ultimate authority in all matters tax and tax foreclosure is the Wayne County Treasurer’s Office.

An extra word of advice from HuffPost: if you're thinking about buying a house at Detroit's foreclosure auction for the first time, first read a little about some of the hidden costs of the city's bargain homes and larger problems with buying foreclosed property in Detroit.

ALSO ON HUFFPOST:

Check out some previously listed Detroit properties that are at least bargains on paper, and read more about the hidden costs of buying cheap Detroit homes.

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$1 Houses And Detroit Bargain Homes

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