Foreclosed houses are going, going and gone for only $100! Taxes too are down for banks. These fancy prices are a nice way out for reducing the tax obligations of the lenders.
In Greater Orlando hundreds of foreclosure houses are being sold each weak of $100 each, even in fancy neighbourhoods like Baldwin Park. There is however a catch down the line. The low price benefits only the banks foreclosing on the houses.
They show flex their bidding power during the initial stages of the auction proceedings. It is well orchestrated. Say one Tom gets the house at this ridiculous price and the state loses out millions in taxes. In Florida the state charges 70 cents for every $100 on each property deal. If a house worth $200,000 is sold for $100 the state loses $1,400 per transaction. By multiplying that into hundreds of houses one can easily calculate what the lenders are gaining from tax manipulation.
Jim Moye, the deputy comptroller of Orange County computes that the state could be less by about $6 million per year only from Orange. He came to this conclusion by observing with others, four days bidding in the courthouse, on the request of the Orlando Sentinel.
All these houses are foreclosed units. The lenders are reluctant to let go of these and manipulate the auction proceedings. All competition is choked off. It means the offer of $100 wins without any challenge in 90% of all the auctions held in the courthouse of Orange County.
Apparently the law is not transgressed. Jim Gilkeson of University of Central Florida says that that it is not as if the lenders or the banks are getting it for a song. They are getting a property that they have “pushed into foreclosure”. The main idea is to frighten off other bidders.
Martha Haynie, comptroller of Orange County says the one of the best ways of holding fair auction is to do it over the Internet – something akin to what is being done by eBay. This way no one can know who are the other bidders and what their offer is going to be. On the other hand the auction opens up to a wider sections of people and “you don’t have the plaintiff holding the sign-up.”
But a Revenue department spokesperson said that it was fine with them the way auctions are held. The law has not been infringed.