Everything you Need to Know about Tax Sales

Tax sales can be a great way to purchase property at a portion of the current market value. Tax sales are always a public auction. In the City of Richmond, Motleys Accelerated Tax Sales (ATS) hosts them for the City. In the Commonwealth of Virginia, all tax sales are tax deed sales – this means that the property is sold in its entirety, as-is, and free of all liens and debts. So how do you get involved?

Find a Tax Sale and Mark the Date

Tax sales are held in an effort by the municipality to regain monies lost from unpaid property taxes. That means that the municipality wants these properties to sell, so they do some advertising. You can look in your local papers or newsletters, or a quick search for “tax sales near me” will pull up some information. Because Motleys ATS works with the City of Richmond, all upcoming Richmond City tax sales are listed on motleys.com/rvataxsale as soon as the list is available to the public. ATS also advertises the sale in newspapers, online, on social media, and even puts yard signs on properties in the sale. If you want to be notified of upcoming Richmond City tax sales, just sign up for our tax sale email list!

Do your Research

Usually you’ll have about a month to see the full list of properties in the tax sale and do your “due diligence”. For instance, drive by the property and research the public records. It’s important to keep in mind that until the sale is confirmed and closed, the property belongs to the homeowner. We do not recommend that you trespass onto the property. Public records for properties in the City of Richmond can be found at the Richmond Virginia Property Search page. Use the tabs at the top to search by property address. We recommend having a few in mind as properties can be withdrawn from the sale by the city if the homeowner pays the taxes due.

Set a Budget

You know what the property is assessed at, you’ve taken a look at the neighborhood, and you’ve driven by the property to get a feel for its condition. Now it’s time for one of the most important steps: setting a budget. When you’re setting your budget, keep in mind that most tax auctions will charge a buyer’s premium in addition to the high bid. The buyer’s premium is added to the high bid to make the total purchase price. If you’re willing to spend $40,000 at most and the terms say that there is a 10% buyer’s fee, you should either be prepared to spend $44,000 or bid no more than $36,000.

It’s easy to get caught up in the excitement of a live auction, but the last thing you want to do is bid more than you can afford! All Motleys ATS tax sales will have the terms and conditions of the sale clearly listed.

Secure your Financing

Although proof of financing usually isn’t required for the sale, if you don’t have the full amount in cash, you’ll want to get financing set up and approved prior to the sale. While the full payment is not due at the sale, the deposit is. The full payment is due as of the date in the Purchase Agreement, which is usually 4 to 5 weeks before the confirmation hearing.

Register to Bid and Figure out your Deposit

You’ve scoped out properties, set a budget, and you’ve gotten financing if you need to. Now’s the time to register to bid! Often, you can register online before the sale. In almost all cases, you’ll need to show that you have the minimum deposit to complete registration. Even though you don’t know how much the high bid will be (no one does until the auction ends!), you know how much you’re willing to spend. Bring a percentage of that amount. For example, if you’re willing to spend $40,000, and the required deposit is “20% of the total purchase price,” we’d recommend that you bring $8,000 in certified check. Think of the deposit as a down payment: it goes towards the total purchase price of the property and is usually due at the end of the auction. The deposit is not the same as the Buyer’s Premium.

Attend the Tax Sale

It’s finally auction day! Check that tax sale website to make sure the properties you want are still available. Remember – properties can be withdrawn from the sale!

You’ll want to get to the auction location early to complete your registration, get your bidder card, and get a good seat. At Motleys ATS tax sales, doors usually open two hours before the sale starts, so you have plenty of time. Make sure you bring a pen and paper, your deposit, and your ID! It might be helpful to bring a clipboard as well. This is also a great time to ask any other questions you may have thought of after the informative sessions.

Pay Attention and Bid, Bid, Bid!

Pay attention to every property, not just the ones you’re interested in. This way, you can get a feel for the rhythm of the auction and auctioneer. When the property you’re interested in comes up, raise your bidder card high. Bid spotters will be in the audience, usually with name tags, to see your bid and make sure the auctioneer notes it. During the sale, many people find it helpful to note high bids on properties as the auction progresses to see what similar properties further down the list may sell for.

And don’t worry - Motleys ATS auctioneers make it a point to talk a little bit slower than at ‘regular’ auctions so that first-time bidders have an easier time understanding and bidding.

Congrats! You’re the High Bidder at a Motleys ATS tax sale…now what?

Congratulations! At Motleys ATS tax sales, shortly after the auctioneer announces the high bidder, a “bid runner” will ask you to confirm the purchase price, deposit due, and total purchase price (including buyer’s premium) on a Bidder Confirmation Form.  Once the Bidder Confirmation Form is signed, head over to the contract counter to pay the deposit owed and get the contracts in order. After the deposit is paid, you’ll head over to sign contracts with City of Richmond representatives.

All sales at Motleys ATS City of Richmond Tax Sales are subject to court confirmation. This means that sales are not final (or “closed”, if you’re familiar with real estate) until a judge approves the purchase price. Court dates are set well in advance of the sale and can be found in Motleys ATS Tax Sale terms and conditions. It’s important to note that although you paid a deposit on the property, it is not legally yours until court confirmation.

Still have questions? Motleys ATS representatives will be happy to help you with anything that has to do with City of Richmond tax sales. Give us a call at 804-232-3300. We look forward to seeing you at the next auction!