News Column

Tax foreclosure auction draws big crowd, nets $2.2M

June 11, 2014

By Justin Sondel, Niagara Gazette, Niagara Falls, N.Y.



June 11--Vacant lots and buildings owned by the city are in high demand if the attendance of the city's tax foreclosure auction is any indicator.

Hundreds of would-be property owners filled the banquet hall at Antonio's Banquet and Conference Center and waited for their opportunity to vie for over 500 city-owned properties taken through tax foreclosures Tuesday morning.

Bruce Andrews, the owner of Great Lakes Real Estate, was the successful bidder on the first house auctioned, a 1,200-square-foot yellow one-story building on 12th Street that he won for $4,000.

Andrews, who has been investing in real estate in Niagara Falls for decades, said he plans to turn the house into a rental unit or try to sell it after renovating, though he has not been able to fully investigate the condition of the house.

He planned to bid on more properties, both for himself and other investors, throughout the day, he added.

"I'm definitely going to fix them up," Andrews said. "Some I may keep. Some I may sell."

Andrews, a Lewiston resident, said he was also considering bidding on vacant lots as speculative investments, but those properties are less likely to be pay off.

"Lots don't do that well in the city," he said.

Andrews said he was encouraged by some of the development downtown, but realizes that investing in a tax-foreclosed property in a city that still suffers from blight is always uncertain.

"It's a risky business," he said. "You get as much information as you can up front and you're still gambling when you do this."

Bernadette Garfalo smiled and bounced in her seat as she realized that her $400 bid on a lot next to her apartment was a winner.

The newly-married Garfalo said she hopes to turn the lot on 16th Street into a space that will benefit her entire block, though she did not have specific plans immediately after filing her paperwork to claim the parcel.

"Me and my husband, we're joining the block club and everything like that," Garfalo said. "So we would like to make it into a community center, just something for the community."

Garfalo described the bidding experience as exciting and said she is glad to have an opportunity to improve her neighborhood.

"It was a really good experience and I hope that some of these places get put to use and don't just sit there," she said.

Winning bidders are required to put a 10 percent deposit on the property immediately after winning the property and must agree to a terms of sale agreement that requires the new owners to bring the house up to code by a date set by the city's inspectors and gives the city the right to refuse sale to any person or entity that owes back taxes or has had a house that was purchased at the city auction taken through a tax foreclosure, among other requirements.

All sales are also subject to the approval of the Niagara Falls City Council.

City Controller Maria Brown said the city auctions are a necessary part of city's responsibility to collect taxes on behalf of its citizens.

"The city really does not enjoy doing this," Brown said. "We're not realtors. We're not in the real estate business."

Brown said the city puts provisions in place to discourage bad investment, but has a legal obligation to attempt to collect as much of the back taxes on the books -- which has already been counted as revenue in previous budgets -- as it can.

"We want them on the tax roll, we want to collect the revenue," Brown said. "All citizens benefit from that."

The city's auctioneer awarded $2.2 million worth of successful bids, with the largest bid coming in at $60,000 for a 91st Street property, according to figures provided by Brown.

The city has to pay they auctioneer company a 10 percent fee and give the school board and county their share of the back taxes as the money is collected when bidders close on the properties.

The city will write off the difference between the remainder of the collected funds and what it is owed as bad debt, Brown said.

"All in all, I thought it was a good auction," she added.

Contact reporter Justin Sondel at 282-2311, ext. 2257

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(c)2014 the Niagara Gazette (Niagara Falls, N.Y.)

Visit the Niagara Gazette (Niagara Falls, N.Y.) at www.niagara-gazette.com

Distributed by MCT Information Services


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Source: Niagara Gazette (NY)


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