Expert: Dottie Worthington - 5/27/2008

Question
There has been a story in the news recently about a property being auctioned off this week by the U.S. Marshall’s Service in Arlington Texas.

The main reason it caught my eye is because the advertisement for the sale claims that the Tax assessment for the property is $5.3 million and the minimum bid is about $617k

Can you give me any insight into why the Marshal’s Service would let the property go so cheaply?

Are online auctions a good option for someone like me (a starting investor)? So you know anything about the company conducting the auction?

There is a link to the site (http://www.bid4assets.com/auction/index.cfm?auctionid=380358)

which has pictures and a detailed description. It looks like it needs work, but it is obviously a very high-end property.

Do you see any downside to bidding online if my maximum bid is a small fraction of the tax assessment?  This property is out of my league, but the Marshall’s service has others on the site.

Thanks in advance for any advice,

David Parreco


Answer
Every home in a REO situation is different. They probably have a note for that much money on the property and they are just trying to get their money back. You will get no warrenties with it and there could be problems. You can go in and do your own inspections and then bid on these homes. Most of them will be listed with a Realtor. The tax assesments are usually not what the house would appraise for, they could be lots lower or lots higher than what the market is showing at the time.