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Bargain Houses Help Recoup Taxes With Macon-Bibb's New Process
Hundreds of people packed into the United building at Carolyn Crayton Park last month, hoping to buy property from the Macon-Bibb County Land Bank Authority for as little as $2,500.
Investors are taking note of Macon-Bibb Tax Commissioner Wade McCord’s revolutionary way to tackle the dilemma of absentee property owners who are delinquent in taxes and often let houses fall into disrepair and yards get out of control.
Rudy and Carolyn Mendes came to the auction to purchase a home for their son.
“A lot of people come in there and have dreams,” Carolyn Mendes said. “To me this is the best way to start to invest and buy your own home.”
The Monroe Street property was the first home they bought through the land bank auction, which is coordinated by the tax commissioner’s office
“It’s going to be your dream home even if you paid just $3,000,” Rudy Mendes said.
Available houses for sale currently are in short supply, but more people are finding diamonds in the rough in communities bearing the brunt of blight.
Self-employed Matthew Hillyer, who moved from Chicago to Middle Georgia in January, sees a great opportunity to buy and flip houses.
“I’m really excited about Macon-Bibb,” said Hillyer who was looking to capitalize on the county’s increasing role as a logistics hub between the Port of Savannah and Atlanta.
He attended April’s tax sale auction after already rehabbing one house in town.
“We’ve had offers above listing. It’s pretty competitive. We’ve had multiple offers,” Hillyer said.
Streamlining the process
McCord’s office works with Superior Court, the land bank, Bibb County School System and county government in a new partnership that practically guarantees buyers for long-languishing homes on overgrown lots.
The Subsequent Tax Sale Judicial In Rem Process is not only a clunky name but the process can be difficult to explain.
“Tell me about it,” said Everett Verner, executive director of the land bank, who already has to continually explain to people what the authority actually does.
This new, one-of-a-kind operation in Georgia gives him plenty more to talk about.
“We communicate with every land bank in the state and they’re kind of waiting for us to report back,” said Verner, who expects to better evaluate the success of the fledgling program at the end of this year.
In a nutshell, the land bank buys properties that don’t sell at the tax sale auction, where buyers must cover all the unpaid taxes and fees. The land bank has agreements with the county and the school system to forgive the back taxes so they are able to offer the property in a subsequent sale with a starting bid of only $2,500 to cover costs to clear the title.
Under this Judicial In Rem process, which means a judge approved the sale of the owner’s property because of the tax debt, the public picks from past-due properties on the published list on the tax commissioner’s website. Those parcels could go up for auction three times before final sale.
“We have to have at least one person interested before we initiate the process,” said deputy tax commissioner Kendall Countryman.
The tax commissioner’s list shows properties that are at least three years behind on taxes.
“A lot of times it’s somebody who passed away and the heirs either don’t know about the taxes or aren’t interested in taking ownership of the property at all,” Countryman said.
Georgia law allows the sheriff to collect judgments against the owners and sell the property if they fail to pay or can’t be located.
On the first Tuesday of every month, deeds are offered to those willing to buy the owner’s debt and pay the levy costs. The top bidder can try to collect from the debtor and charge up to 20 percent interest under the law.
They have to wait a year to take possession to give the owner a “right of redemption” by paying up back taxes and reclaiming the property. If the owner doesn’t pay, the new buyer can claim a clear title after 12 months.
Many parcels do not sell at the sheriff’s auction. In some cases, the back taxes and fees eclipse the worth of the property, especially in declining neighborhoods where even occupied homes have trouble holding value.
Those unsold properties are listed for a Subsequent Tax Sale, which also occurs on the first Tuesday of the month at the courthouse.
Clearing titles and waiving taxes
In the Judicial In Rem process, attorneys research ownership and claims on the property. They present findings to a Superior Court judge who can authorize sale of the property to the highest bidder with a 60-day right of redemption for the owner to reclaim it.
That process is not new and has been implemented in the past on a case-by-case basis once someone shows interest in a tax delinquent property. What McCord is doing that is revolutionary is automatically applying that process for all subsequent tax sales and shortening the time it takes for the new owner to get clear title to the property.
Nearly 100 people gathered on the courthouse steps for April’s tax sale auction and Angela Johnson was right in the middle of them.
The recent transplant from the nation’s capital wants to rehabilitate the 1933 house at 379 Madison Street. But as Tax Commissioner Wade McCord opened bidding, Johnson kept her hands by her side.
“I have an opening bid of $10,890.27 for 379 Madison St. Do I have another bid? $10,890.27 going once, $10,890.27 going twice, $10.890.27 going the third and final time… and sold,” McCord said.
Johnson let out a relieved laugh and uttered, “Ooo, thank you!” as she waved to Verner at the top of the stairs.
That opening bid of nearly $11,000, which amounts to taxes and fees owed, came from the land bank which has agreed to waive taxes and sell that house to her as part of their regular duties to revitalize neighborhoods.
Under that role, the land bank works with people like Johnson, whose DCGA Properties company buys houses and rehabilitates them for low-income folks.
“I do a little more than flip them. I make it affordable. That’s our mission,” said Johnson, who worked as a homeless liaison in Washington, D.C., before moving south to where her husband contracts with Robins Air Force Base.
She’s already completed four properties and currently is shooting for two more.
People wonder if she realizes what she’s getting into when she shows up on these overgrown lots but they are amazed in the end. The eyesore is gone.
“The neighbor across the street said, ‘I am so thankful now I can look out the window,’” Johnson said. “It’s about making a community, not about making money.”
Others in the crowd that day also did not come to bid but came to keep an eye on property they are interested in.
At the subsequent tax sale, the land bank always holds the opening bid — a baseline of back taxes and fees. If someone else bids, the land bank steps back and does not bid again. The property will be sold to the highest bidder who pays those back taxes and fees but must wait for a 60-day period of redemption to allow the owner to make restitution and reclaim the property.
If no one bids, the land bank takes ownership, forgives taxes and will offer it up for auction again in 45 days on the last Wednesday of the month. Most recently, those sales have occurred at the one-story brick building near the Elaine H. Lucas Senior Center at Carolyn Crayton Park.
The opening bid of $2,500 covers the administrative and court costs of clearing the title.
The buyer must present a cashier’s check or money order within an hour and will have clear title in hand in about five business days of that check clearing.
That means the Mendes family can take ownership right away and not have to wait 60 days or a year to move in or start work.
The land bank and tax commissioner do urge “buyers beware” as properties are sold “as is.” Often photos on tax websites or other online services such as Zillow can be years old and do not represent current conditions. In some instances, a structure might have been torn down or suffered vandalism or other damage. A site visit shortly before the auction is recommended.
Housing shortage spurs activity
The new Judicial In Rem process began late last summer. Verner held his first sale under the program in January.
March’s crowd of between 200 to 300 people came from all over Georgia and some from out of state. Verner was worried only eight or nine people would show up to buy the 11 properties up for sale.
He looked joyfully astonished when the auctioneer shouted his last “sold!” after the crowd had continually dwindled with each sale.
“Sold everything,” he happily told The Center for Collaborative Journalism. “All sold for a lot more than I was expecting. Eight or nine for more than we spent. So that’s bananas. … I’m going to need time to process because that was a whirlwind.”
Properties were going for more than their opening bids at the prior subsequent tax sale when no one tried to buy them.
Fred Sterdivant, who works at Robins Air Force Base, wants to purchase properties for dads he’s trying to help through the non-profit Fathers Among Men. He also was shocked by what some of the properties went for.
Sterdivant believes people saved money by staying in during the COVID-19 pandemic and have had ample time to research available properties.
“With the housing market the way it is, we’re getting calls from all over the country,” McCord said. “It’s different. It’s novel and Macon has the inventory of houses to sell.”
Verner noted that as lumber and building materials skyrocket, houses in disrepair are more valuable especially if they have good bones that can save a contractor money.
McCord says the county is getting a lot of attention.
“It’s promoting a lot of interest in Bibb County real estate,” McCord said. “But it’s all about collecting taxes.”
The estimated $200,000 the land bank took in during the March sale will be split among the county, school system and land bank. Plus, the new owners will be paying future taxes and have agreed to fix any current code violations.
“This is not a blight project, right, but it has a backhanded benefit of clearing up blight because people are going to buy these and for the amount of money I’m seeing people invest in these, I would be shocked if they weren’t going to fix them up,” Verner said.
Code enforcement struggles to identify who is actually responsible for upkeep on blighted properties. Through these sales, enforcers have current information and can hold the new owner responsible if repairs are not made.
McCord says tax collection rates also are up because he works out payment plans with taxpayers who are in arrears. Plus, with more buyers coming forward to invest in these houses, it’s a riskier gamble for those who think they can still hold onto their property without paying taxes.
Once a property is listed on the subsequent tax sale list, the owners can no longer make partial payments.
“Taxes have to be paid in full before we pull it from the list,” McCord said. “The delinquent taxpayer is no longer gambling. We’re calling their bluff.”
Verner says they can’t really lose with this streamlined Subsequent Tax Sale Judicial In Rem process.
“Don’t go to Macon, Georgia, and think you’re not going to pay taxes because they will give it to someone who will,” he said. “Clear titles, new owners and when someone else buys it at a tax sale, the taxes are paid. That’s our joke. It’s hard for us to fail.”