How do you know what to bid?

[Reenster]

I apologize in advance, because I'm sure this question has been asked.  I just joined, (today) and was just recently introduced to the world of tax sales, (yesterday)  What I can't figure out is, how do you know what to bid?  Is there a standard, ie: 1/2 the appraised value?  I've read about some sales going for way more than appraised value, and some for just over minimum. 

Also, if you had to choose, would you pick a vacant property or one with a house on it and why?

Thank ya' kindly.
Reenster
 

[speedfreeksteve]

Don't confuse assessed value with appraised value. Often in these sales you will see the assessed value listed on a property. More often than not, the assessed value is not in line with the real value of a property. It's mainly used as a rough figure to be taxed against. In fact most properties and homes are assessed without even being looked at in person by the town.

As to your question about vacant lot vs. house..  I'm assuming you are looking into this for investment purposes. They each have their advantages and disadvantages. A house can be run down and turn into a money pit, while on the other hand a piece of what may appear to be prime property may be stuck with environmental regulations or you may be unable to get a building permit for the property which essentially makes it almost worthless.

[Reenster]

OK, so do you bid according to the appraised value or the assessed value?

[speedfreeksteve]

In my humble opinion there isn't some magic equation to go by. First of all though I would completely ignore the assessed value in any valuation of a property. As for "appraised value" that can help give you a ballpark figure of what value to bid would be too much.

Your best bet is to do your research, look at what similar properties sell for in the same area. Also look at previous tax sales in the same area to see what people have bid. Keep in mind as well though that at least a handful of properties in certain areas (cottage country and GTA) have been bid up close to or well above what many would value them at. Your goal if you find a property you want should be to figure out the lowest amount possible that you can successfully bid to get the property.

I think some people just get carried away in the whole process. Not that it's unique to tax sale auctions.. I have been at goods auctions where TV's and computers were selling for more than what a new one at Walmart would cost.

[swanr]

You need to find the lowest amount which will make you the highest bid.  the municpal goverment is not required to get fair market value.  It is only obligated to accept the highest bid.  in fact the difference between the minimun tender amount and the amount of the winning bid goes to the Public Guardian {or equivalent.}   

Also don't forget that it takes at least 12 months for when the cancellation price or min. tender is set until  the tender date .  so you will end up paying another year or two or three of taxes,  then land tranfer tax, GST unless the land has been sold once before as residence, any crown leins and an admin fee for getting and filing the tax to you.   All things you need to factor into your tender.     

[Rob]

Think of the bidding process as a poker game.  For properties you don't care about you could put check bids, low minimum type bids.  For a property you must have, overbid and pay more to ensure you win the bid. 

But before you determine what you should bid, get as much information as possible.  A federal government lien changes your bid, its extremely important you find out before you bid.

[speedfreeksteve]

One more thing I should've mentioned. Check out the properties you are interested in personally no matter what. After awhile you'll notice properties that you love just from the description but when you see them you'll realize it wasn't what you expected. Likewise, I've seen properties that sounded pretty undesirable in the description but actually discovered in person that they had things to offer that were not in the description (good right-of-way, spectacular view, etc)