Yesterday morning the city of Lowell held an auction of nearly 300 tax title properties in the city council chambers at Lowell City Hall. Ten individuals pre-qualified as bidders (pre-qualification was required to participate) and a total of more than 30 people showed up for the event.
There is no set way to hold one of these auctions and the city took what might best be called a macro approach, offering all of the properties in a single bundle with a minimum bid price of $6mil. When there were no takers for that, three different sub-bundles were offered, each with a minimum bid of $1.7mil or higher. There were no bidders for any of them. The auction ended within 5 minutes of its opening.
The good news is that the city took in more than $800,000 in back taxes from people whose properties were initially on the list. As for the failure to sell, that might just be an example of the city being a responsible seller. If everything sold right off the bat, we'd be left asking whether the minimum bid amount had been set too low. And a benefit of bundling the properties is that buyers would have to take the bad properties with the good and not just cherry-pick the best of the lot which would have been the case if the properties had been sold individually.
The city has given every indication that this was not a one-time thing but that another auction will be held in the coming months. Learning from the experience of this event, perhaps the bundles will be made smaller, or at least the mixture of properties will be tweaked to find the right balance between something that makes financial sense for the buyer yet keeps the city from selling off assets at a steep discount. Besides, if the city fails to hold a subsequent option, the tax delinquents who grew comfortable allowing their properties to linger on the tax title list will also grow comfortable in the face of tax lien auctions if nothing is every sold.