Every November, the city auctions off homes to the highest bidder, according to a CTV News report. In these auctions, called tax sales, the city has taken ownership of properties with three years of unpaid property taxes. Bidding on the properties begins at the “upset price,” the total of the longest overdue taxes and interest. That means properties are often sold for a fraction of their market value.
This year, 18 Vancouver homes and businesses, owing a total of $600,000 in back taxes, are on the auction block, according to CTV. One of the businesses, valued at $2.1 million, is up for an opening bid of a little more than $24,000. A home valued at $616,000 is set for an opening bid of $3,300.
However, it’s rare for a winning bidder to actually take ownership of a property, according to CTV. That’s because the sales are really an incentive for the original owners to pay off their taxes.
The current owners of the properties up for sale have a year after the tax sale to redeem the property by paying off what they owe. If they do, they get the property back.
So what’s in that for investors? Well, if the original property owners do manage to redeem their properties, winning bidders get their deposit back, along with 6% interest, according to CTV. In fact, many who bid at tax sales aren’t necessarily looking for the properties themselves – they’re just after a healthy return on investment.
If the property isn’t redeemed, it’s transferred to the new owner. And with Vancouver real estate prices projected to rise for at least another two years, it’s a safe bet those investors will turn a profit as well.
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