2007 Update

2004 Update

The April 22nd tax auction was a disappointment. After 12 years of bargains where clients made large profits, frenzied bidding drove auction prices above "retail." Note that the last time this happened was in 1991 and 1992, the beginning of a substantial fall in local real estate prices. Is this a leading indicator? Is the bubble about to burst? My guess is that it is -- that the profligate war spending and tax cuts will catch up with us within the next year or two and cause interest rates to rise and property values to stop rising or fall. I rarely forecast the future, the last time was in 1996 when I forecast a rising market. As luck would have it, prices more than doubled since then.
Please don't shoot the messenger. It was a lot more enjoyable to write a forecast 8 years ago than today.

2003 Update

Unlike the past several years, there were no great bargains at the May 2003 Ulster County real estate tax auction. I'd been expecting this for a couple of years, since real estate has become a hot topic.

Clients bought a fixer-upper for $66K and two 2 1/2 acre land parcels for $11K and $16K. Based on the last cycle 12 years ago, I'd expect it will be a few years before we see many good deals here again.

2002 Update

This has been an exciting and profitable year at the auctions. Some of our client purchases included the following, at an average cost of less than 50% of market value:

Sweet 2 bedroom cottage 1.3 acres Rosendale $45,300. - Rented for $600. per month
Two bedroom home Town of Ulster $18,100. - Sold November 2002 for $51,000.
6 acre parcel Town of Saugerties $22,000.  - Sold November 2002 for $44,000.
6 acre parcel Rosendale $8,200. 
3.4 acre Hudson Riverfront parcel $109,000. - In Contract 2003 for $215,000.
7 acres Saugerties $2,300. - On the market at $45,000.
Three bedroom home 1 acre Rosendale $34,000. - Rented for $800. per month
2.4 acre parcel Ulster $4,600. - In Contract May 2003 for $22,000.

July 2001 Greene County Auction Update

 Auction fever took over this auction. Prices were ridiculously high and our clients bought nothing. Many totally worthless properties were sold for high prices. This has happened in the past for a few years at a time. Then those ignorant buyers who get burned stop coming and prices come down to earth.

June 2001 Auction Update

Prices were higher this year, as expected. Client purchases in Ulster County included:

9.3 acres in Saugerties $9,000. - Sold for $20,000. 
Mobile home on 1/2 acre on troutstream $9,200. - Conveyed back to owner who lost it for $4,000 fee. (could otherwise been sold for $45,000.)
9 hole golf course, 50 acres & Clubhouse $107,000. - Sold at substantial profit. 
2.2 acres in Rosendale $2,900. - Sale rescinded. 
Mobile home with addition 2 acres, Marbletown $17,300. - Sold for $36,000.

 

1999 Update

"The two major 1999 auctions were especially productive. Our clients bought 9 properties; 5 residences and 7 parcels of land totaling over 125 acres for a total cost, of less than $100,000. (probably about one third of the actual market value). The information below includes more specific details from past auctions and gives examples of what we find."

"The information below is a couple of years old, but remains a representative sample of the types of deals one can get at auction. The prices at the auction market are extremely cyclical. For example, in 1991-2 frenzied bidding at the Ulster County auctions pushed prices so high we bought nothing. Then, my assumption is those bidders who overpaid lost money and disappeared, because prices fell. The past two years in Greene county bidding got crazy again and no real bargains were available. Ulster County, however, has remained a fertile arena. If the market changes dramatically, I'll update this; my suggestion if you're really interested in the auctions is to give me a call."

In May 1997 our clients bought 8 properties in Ulster and Greene Counties, each at a price between 30% and 70% of estimated market value.

Properties bought at auction by Teran clients in the past:

15 Waterfront acres bought 12/95 $15,000. sold 8/96 for $38,000.

3 Bedroom ranch bought 12/95 $17,000. in contact to sell for $40,000.

3 Bedroom farmhouse w/14 acres bought 12/95 $7,000. NFS.

Townhouse shell bought 4/96 $18,000. sold 12/96 for $42,500.

1.1 acre building lot bought 4/96 $2,200. for sale at $14,500.

5000 square ft. warehouse bought 10/96 $15,500. appraised at $79K.

3 Bedroom ranch, recently renovated, bought for $10,000 10/96. appraised at 66K

An article from "In The Life"

In Ulster County, hundreds of properties are sold at auction every year. The vast majority of these properties are sold at two types of auctions: real property tax auctions and auctions of properties on which the mortgage is being foreclosed. While in some places individuals auctioning their property is not uncommon, here it is unusual. This article will deal briefly with the risks and rewards of tax auctions in Ulster County. Other counties also auction tax delinquent properties, but the rules and procedures differ for each county.

The potential rewards are straightforward, one can sometimes purchase a property for 15 to 60% its market value, but it can be daunting and risky. The county publishes a list of two or three hundred properties to be auctioned; one must first do many hours of research to find the dozen or so which may be worth bidding on. Many of the parcels sold are virtually worthless - they may be tiny, landlocked, all wetland, underwater; or even hazardous waste dumps - yet many of these are bid on nonetheless by the naive, looking for a bargain, who have never even seen the property. The county requires payment in cash and offers no guaranties whatsoever.

Any of the properties can be redeemed by the former owner by payment of the back taxes right up to the day of the auction, and a majority of those of value are. With luck, a few valuable properties will actually be auctioned off. The upset, or minimum acceptable bid, is generally the amount of back taxes owed the county, often about 15% of the market value reflected by the assessment. Ulster County reserves the right to reject any bid up until the time, usually a couple of months after the auction, when it gives a deed to the purchaser.

After receiving the deed, the purchaser's trials have just begun. A pun is intended, for most properties require legal action to clear the title before the property will be marketable. This is an expensive and time consuming procedure, usually taking a minimum of six months. All too often, a former owner or lienholder will sue to try to recover their property, which can tie up the property in litigation for years. In this case, the legal costs, plus the years of taxes which accrue on the unmarketable property, can easily run tens of thousands of dollars. I believe that a majority of sales at tax auctions result in losses for the purchaser.

Despite these risks, I bid on properties every year. I believe that when one understands the major risks, does the necessary research, and factors into the calculation of an appropriate maximum bid both an amount for the expected future expenses and something for the unexpected, one can expect to be able to invest with a good probability of making a profit.

Andrew Peck is the owner-broker of Teran Realty, serving Woodstock and the Hudson Valley. They offer buyer brokerage services for auction and conventional market purchases. He can be reached at (845) 679-3333

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