Want to snap up this $1M Toronto home? Opening bid is $119K — but there's a catch
City to auction off 3 Toronto homes Thursday for way below market value
Imagine being able to buy a home worth nearly $1 million in one of the country's hottest real estate markets for a little more than $100,000. The only catch: You can't go inside the house before putting in your bid.
The City of Toronto is auctioning off three homes on Thursday, one of them a house assessed at $932,000 in upscale High Park North with a starting bid of $119,000.
The other two homes going on the block are a two-storey semi assessed at $775,000 in the trendy Bloor-Ossington neighbourhood that could go for as little as $97,000; and a split-level fixer-upper in suburban Etobicoke assessed at $457,000 that starts at just $92,400. All three have been taken over by the city for non-payment of property taxes.
What are the chances the lowball opening bids could win one of these properties?
"That is a possibility," Toronto's director of revenue services Casey Brendon said this week. "There are surprising results that happen in a tax sale."
Starting bids are equivalent to the amount owed in back taxes plus any associated costs racked up by the city while it has tried to collect the arrears.
"Nobody will pick this up for a song, but it could go for substantially less than the market value," Brendon told CBC News.
But he cautions that because prospective bidders aren't allowed to view the interior of the properties before the auction date, the winners could face some unpleasant surprises before they move in.
The houses have been vacant, in some cases for many years.
"You can do a drive-by on the house. You just can't go inside and inspect," he said. "In these cases, we know them to be vacant, abandoned properties. They're not in good shape. These are properties probably that have animals living inside them."
Tax sale properties typically require a lot of work — from extensive renovations to complete demolitions and rebuilds — before the property is habitable, he said.
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But George Aregers, who's acting as an adviser to two friends who are prospective bidders, said he believes the risks are worth the potential reward.
Standing in front of the north Etobicoke property at 56 Netherly Dr., the one with the minimum opening bid of $92,421.30, he said he's sure the home could be made livable relatively cheaply — despite the presence of a dead raccoon hanging from the eavestrough over the front door.
"I know this house right here is a bargain," he said. "I think it's assessed very low."
While there have been cases in which the minimum bid has won the property, Brendon says that's usually only when the property in question has little general appeal — a bare or hard-to-access strip of land, for instance.
The three residential properties are on the block because their owners either cannot be found, have died or are otherwise unable or unwilling to pay off their back property taxes, Brendon said.
'The final step'
In those cases, the city takes over some of the upkeep of the properties, and offers them to the highest bidder after at least a couple of years of attempting to recover the taxes and related expenses, like legal and advertising fees associated with the tax sale.
"The tax sale is the final step in our process to collect tax arrears," Brendon said. "It's rare, in that the city is very reluctant to offer a sale of land for tax arrears. We make every effort to collect property taxes from owners prior to it getting to this point."
He said the city has spent about eight years attempting to resolve the tax arrears of the current crop of three homes. That typically includes everything from checking land title records to speaking with neighbours. The city hasn't had an auction since 2017, he said.
The auction happens at North York Civic Centre. Prospective buyers can submit a sealed bid until 3 p.m. Thursday.
The bid must be accompanied by a certified cheque, bank draft or money order for 20 per cent of the bid, according to a newspaper ad placed by the city two weeks ago, and must cover the city's minimum bid requirement.
Brendon said it's impossible to say how many potential buyers the properties will attract, but in the past he's seen as many 120 bids on a single property.
Brendon said the city normally holds tax auctions a couple of times a year. But in the past few years he's been concentrating only on the current three properties. No one has come forward to claim them.
Aregers, who's retired and says he's bought at least eight tax sale properties over the years, will be at the North York Civic Centre Thursday afternoon for the result of the auction.
So will Brendon, who said his department's efforts to find the owners of the properties will continue right up to the deadline. If one of the owners comes forward then, they'll have one last chance to pay off their back taxes — which would nullify the auction, he said.
Most municipalities have property auctions
Failing that, the winners and their bids will be publicly identified in the council chambers at North York's city hall.
Tax auctions are common across the country, with most municipalities setting out rules that govern what becomes of properties once their owners stop paying taxes on them, Brendon said.
A search by CBC News turned up several cases within the last couple of years, country-wide.
In Princeton, B.C., for instance, a family home was reportedly sold in a town tax auction last month for the minimum bid — just over $3,000.
And in February, in Red Deer, Alta., about 40 properties were scheduled to go on the block in a tax sale, prompting one city councillor to wonder whether the region's economic troubles could be to blame for the long list, according to a report in the Red Deer Advocate.
As of Sept. 6, the City of Brandon, Man., had 36 properties on its tax arrears list, up from about 24 the previous August.
In Springhill, N.S., last spring, the Amherst News reported that Cumberland County was preparing its biggest-ever tax sale, with about 40 properties on the block.
And in St. John's, Nfld, in January, 2018, the city's tax auction had to be cancelled at the last minute when title disputes erupted just days before the planned sale. It would have been the first tax sale in that city in years.