We apologize for not having very many images to include in this post. It was an information heavy day; more about talking than about seeing cool things.
Having given a Prescott / Chino Valley area a quick re-exploration, we noticed that it did not feel nearly as cool and / or vacation-like as Silver City. It was the same Prescott we’d gotten excited about last time we’d visited, but in the course of the last year or so we’d changed. Although it has a Trader Joe’s, a cool parrot store and a mini-Boston feel to the downtown, we’ve decided to get serious about Silver City as our new home. If the land auction goes well, things could move along quite fast.
The county clerk’s office opens at 8am on weekdays. As we prepped for bed the night before, we assertively announced that we would be done with butter coffee, dog walk, showering and breakfast in time to arrive at the clerk’s office when they unlocked their door. It didn’t happen exactly like that.
We arrived around 9:30am and hit the ground running. Jason had previously told us that the clerk’s office would help us research the properties so we started there. Before we get into our experience, here’s a quick intro to land auctions…
How a land auction works
If you choose not to pay your taxes, the county can auction off your land. There are a lot of other details and considerations but I don’t feel like going into that aspect of it since we aren’t losing our land. We’re the buyers so here is what we learned about buying land at an auction.
New Mexico has 3 land auctions per week. Silver City has 1 per year. Texas has 55 per week. Every state is different.
If you don’t pay your tax bill, the county sends you a notice of delinquency and charges you interest and fines. If you haven’t turned up with money by the date of the auction, then your land can be sold to the highest bidder.
There are two types of auctions – a Deed auction and Lien Certificate auction. For a full description of the differences and how it impacts the the resulting purchase, read here. The gist of it is that a Deed is ownership and a Lien is not. When you win property at a Deed auction, you will likely walk away with the Deed that day (some states take 30 days) and can (almost) consider yourself the owner.
The governing body wants to sell the land because it is then becomes a tax earning entity again. Even though it isn’t nice, the local government would rather remove the land from a non-paying owner and sell it to someone who is not only going to pay off the former owner’s debt but also make the property tax earning again.
The minimum bid is determined by how much is owed in back taxes. However, paying a small amount (i.e. $400) doesn’t mean you’re going to walk away without paying other surprises.
Liens and Redemption Periods
Liens that are put on someone’s property become the responsibility of the person who buys the land at auction. One of the fourteen properties on the list had a tax burden of $128k but a minimum bid of $1500. So if you come in, win the property at $1500, you’re going to be in for a nasty surprise if you didn’t do your research.
It is the sole responsibility of the buyers to do the research necessary to purchase the land. One way to do this is to pay a title company to dig up all the public records on the person losing their land. We attempted to do this as soon as offices were open today, but found out that a title search takes 5-10 days. That’s too long! We needed the info before the close of the day today.
Another snafu is the redemption period. If you buy a piece of land at auction and build your dream home on it, you can lose it all if the owner shows up and proves something procedural went wrong. For example, if a former owner can prove the spelling of something was incorrect or that they never received the tax notice, they can take the property back, regardless of any improvements or investments the buyer has made.
The redemption period is different in every state. But the important thing to know is you can’t get started building right away. You have to wait to make sure the former owner doesn’t show up and cause a stink.
In New Mexico, they have a federal (IRS) redemption period (which has something to do with charging back tax to the new owners) of 120 days and a period of 2 years where the former owner can take the matter to court.
The County Clerk & Title Research
When we first entered the clerk’s office, we told our story and asked for help; those were the directions we had received from Jason. The lady was kind of unenthusiastic but directed us to two computer stations where we can research the public records for that property. We were able to dig up 2 documents for the delinquent owner – a deed transfer of the land from her deceased mother and a power of attorney.
We also found tax bill notices and payment receipts dating back several years. It was clear this woman was always behind on the tax payments. She would pay several months late and often not pay enough. One year showed that her payment was applied to the tax year from 5 years ago. We interpreted this as promising news because it seemed she was just going to give up.
Furthermore, based on the story the records painted, it seemed she didn’t care. She didn’t live in the area, had inherited the land from her mother (and therefore had no invested stake in it) and hadn’t made any improvements to it in all the time it had belonged to her (7 years). It seemed she was burdened by having to pay for this land and was going to let it go.
When we realized we were not going to get extra support from a title agency, we did our best to dig, dig, dig. As a mid-day break, we decided to go visit the lot again.
Our visit to the Auction Land
We made several important discoveries while out at the property.
A) We discovered that the power poles stopped 0.4 miles away and that we’d likely have to pay to extend it or go off-grid right away.
B) We found that the line between the rancher’s property and this property had seemingly faded over the years. There was a rancher’s fence going right through the middle of the auction lot. Seemed odd…
C) Utilities/cable – We could see that a neighboring RV park had satellite dishes and that telephone lines were nearby. However, it was obvious we were well beyond city utilities and we would have to dig a well and install a septic system. Extra expense to consider when planning our max bid.
D) We saw a baby rattlesnake.
It was a fruitful visit. After traipsing around near the perimeter, we were pretty confident this land was for us. We knew we had a few questions (rancher property line, electricity possibilities, etc), so we headed back into town to get more information. The answer to every question seemed to spawn two more. We were making notes like crazy and trying to keep track of everything we needed to know before the auction on Wednesday morning.
The auction was the reason we had to establish an account with a local bank. If you win a piece of land at auction, you must have a metal briefcase of money ready, a set of cashiers checks or a letter from a bank branch saying that you have the money in your account whereby you can pay with a personal check.
A Turn of Events
We marched back into the County Building with confidence and smiles. This was it! We were going to get our questions answered and register for the auction. While Brian went to speak with one of the offices, I decided to look at the Auction Board – it lists all the details of the properties in play and shows red PAID stamps in cases where the owners showed up and paid.
Much to our surprise, I found a “PAID” stamp across the property we wanted. It was a strange moment to have all that momentum (calling like mad all Monday morning, driving 6 hours to get back, crashing, waking and doing research as fast as possible and then looking at the land) come to a halt. We tried 2 or 3 times to declare our next step and found that each time it was related to that auction lot. It was time to reorient and start again.
The New Plan
I am writing this on Tuesday evening. We had a wonderful dinner at a Mexican restaurant called Kontry Kitchen (funny, huh?) and retired to the room early. I’m getting the blog updated and Brian is conducting research on water rights and water well estimates.
We are considering Highway Wilderness (read more here) as a front-runner for our new home, but we’re not rushing to buy it as fast as possible. It is a great piece and had a serious price drop recently. But if it’s meant to be, then it’ll be. We plan to expand our search range to areas further outside of Silver and go slow. The auction lot was great but it never would have entered our radar due to being 12 miles outside of town.
We have options in every direction so we’re going to check things out tomorrow. As soon as we can, we are going to move into a month-to-month rental situation so we can eat normally (i.e. fridge and stove) and give the dogs more space. We are doing fine living in the space of a hotel room, but it is challenging to create organization with limited furnishings and no kitchen.