Homestead Property and Surplus
When determining the opening bid, a county takes into account if the property is homestead. If it IS, then 1/2 of the Assessed value of the property is added to the Opening Bid. That shows BIDDERS what they need to start the bidding. However, for the purposes of collecting surplus after the auction, that ‘1/2 of the assessed value’ also goes to the previous owner/lienholders/mortgage company (whoever is claiming the surplus).
No matter what the starting bid and ending bid is, the county only recovers their past due property tax and any fees they incurred in order to auction the property. The rest is surplus.
Here is a good rule of thumb to let you know if you should check to see if the auction record you are looking at is possibly Homestead and you should investigate further.
- If the starting bid is LESS than HALF of the Assessed Value, it is definitely NOT Homestead Property.
- If the starting bid is MORE than HALF of the Assessed Value, it may be Homestead and you should check. Now it could just be that the property owner DOES owe that much in back taxes, but it is much more likely that the property IS homestead.