Flipping Foreclosures

MAYVILLE – Chautauqua County’s recent tax foreclosure auction hosted a high turnout, and will hopefully put more than 200 properties back on the tax rolls.

The public real estate auction was held at Chautauqua Lake Central School in Mayville, where the county put 285 foreclosed parcels up for auction.

According to Jim Caflisch, director of real property tax, 220 of the properties received offers, which he said was consistent with previous years.

An analysis of 2014 numbers revealed that the number of units in the auction was significantly lower than recent auctions and was down by 118 units in comparison to the 403 parcels that went to auction in 2010.

Statistics did not include bank foreclosures.

Caflisch contributed the trend to a redesigned foreclosure process, which the county adopted in 2011. He said this year’s number of parcels was lower because the auction included foreclosed parcels from 2012 only, whereas two to three years’ worth of foreclosures were auctioned off at previous events.

The new process also entails a delinquency period of two years for those who do not pay their taxes, whereas the former method allowed for three years.

“The shorter delinquency period means people are recognizing sooner that they need to pay their property taxes,” Caflisch said. “I believe it’s helped immensely, and people understand they have to prioritize where they’re spending their money and budget those dollars accordingly.”

Furthermore, he said bidders who purchase parcels and turn them into rentals are realizing it’s no longer profitable to let the tax payments slide, because they don’t have three years to do so.

“They’re recognizing they won’t get their money back if they can only rent it for two years and not pay taxes,” Caflisch said. “There’s been a change in the mindset.”

While 127 parcels in Jamestown and 29 in Dunkirk went to auction last week, the percentage of property owners in Dunkirk redeeming their taxes after notice of foreclosure did improve.

This year, the town of Gerry had the highest percentage of unredeemed properties, with 13 of 18 parcels going to auction.

Twenty-five out of 62 parcels were unredeemed in the town of Ellicott, or 40 percent, while Ripley had an unredeemed rate of 33 percent.

Municipalities with the highest number of foreclosed properties in terms of the number of housing units in each town were Stockton and Cherry Creek at 5.22 percent and 6.6 percent respectively.

Chautauqua, Carroll and Clymer property owners have been consistently in-tune with paying their taxes, as zero properties went to auction from those municipalities.

“I think the economy has improved to some degree, but also lower interest rates and mortgage rates have had a big effect on people purchasing property because they can buy with cheaper rates,” he said. “Also, real estate has always been an investment tool. There are returns in real estate that exceed a lot of different other savings avenues, like certificates of deposit and savings accounts.”

The new foreclosure policy may also improve the status of rental structures, as property owners who plan to rent them out must supply the county with a letter from a code enforcement officer that the property is in compliance.

“People were buying properties to rent and they would let them slide into various code violations, and the quality of the housing stock was dropping,” Caflisch said.

Now, the county will wait to see how many of the property sales close.

“Sometimes, not everyone closes because people decide not to follow through for some reason or another,” he said. “But most of them probably will.”