With the completion of the first two 2015 Adjudication sales for the City of New Orleans in July and August, two major changes in the auctioning process make it clear that a small Tax Sale investor may not be a good candidate to invest in an Adjudication sale.
The first change is Proxy Bidding. This allows an investor to set a maximum bid on a property and then walk away from the online auction. That investor’s bids will increase incrementally throughout the auction until a maximum is reached. Where a small Tax Sale investor may enjoy an advantage over an institutional investor by being physically at the computer to place bids, the institutional investor can place a maximum bid on a large amount of properties without a physical presence, effectively eliminating the small investor’s competitive advantage.
The second change is the Sliding Close. This extends the auction for a particular property by 5 minutes if a buyer places a bid on that property during the last 5 minutes of the regular auction. What this change has done is bring the winning bid as close to actual market value as possible. I’ve seen properties increase by 50% after the close of regular bidding with the Sliding Close.
These changes have been great for increasing the winning bids, and I’m thrilled to see the City of New Orleans reap its much needed rewards. However, for an investor, I don’t see much difference than buying a property at market value in an Adjudication sale or simply buying on from a broker on the MLS.