Navigating the Rochester, NY Tax Foreclosure Auction

What We Wish We Knew In Advance

On November 9, 2023, Rochester, New York held its annual tax foreclosure auction, giving prospective buyers a unique opportunity to acquire properties at a fraction of their market value. For those unfamiliar with the auction process, this post aims to shed light on insights and learnings from the event.

Smaller Property List on Auction Day

One of the first things that may surprise newcomers to tax foreclosure auctions is the significant reduction in the number of properties available on the day of the event. The original list may have started with over 300 properties, but by the time the auction day arrived, there were less than 170 properties available to bid on. This reduction is due to various factors, including property owners settling their debts or legal complications. As a result, it's essential for prospective buyers to research multiple properties in advance and have a flexible target list. In our case, we researched over 30 properties but ended up focusing on five. Unfortunately, on the day of the auction, only one of our target properties was still available for bidding.

High Demand, Limited Supply

Another key takeaway from the tax foreclosure auction is the staggering demand for properties compared to the limited supply. There were likely over 1,000 attendees competing for fewer than 170 properties. This high demand can make the auction incredibly competitive, and some attendees, often representing businesses, engage in aggressive bidding on multiple properties. Understanding this competitive environment is crucial for making informed bidding decisions. You may also notice that those representing businesses set an aggressive bidding tone early on in hopes of discouraging others. This is seen with rapid bidding on early properties that drive the winning bid much higher then what would have been expected.

Bidding Above Government Assessments

One common misconception is that winning bids will fall between the minimum bid and the government-assessed value of the property. However, in reality, many winning bids surpass the government assessment by a significant margin. To understand this dynamic, it's essential to study how other bidders are making their decisions. Some bidders may be willing to pay above the assessed value due to their knowledge of the property's potential or for other strategic reasons. Therefore, focusing solely on government assessments can lead to inaccurate bidding strategies. For instance, from our target list, a property with a minimum bid of $17,040, a City of Rochester assessment of $67,000, and similar homes listed on Zillow around $64,000 ultimately fetched a winning bid exceeding $70,000.

Cash or Certified Funds Are a Must

To participate in the auction, it's essential to come prepared with cash or certified funds. However, it's worth noting that not just any certified funds will do. For this auction, certified funds are limited to a certified bank check payable to you. Ensure that you have the necessary funds available before attending the auction to avoid any complications during the bidding process.

The Rochester, NY tax foreclosure auction on November 9, 2023, presented a unique opportunity for property buyers, but it also came with its own set of challenges and dynamics. By recognizing the reduced property list, the competitive environment, the need for certified funds, and the reality of bids exceeding government assessments, prospective buyers can better navigate and make informed decisions at future tax foreclosure auctions. As with any investment, thorough research, strategic planning, and adaptability are key to achieving success in this highly competitive market.