To the 200 people who showed up Monday to bid on Sedgwick County property in tax foreclosure, Chris McElgunn voiced a warning.
"It's buyer beware," McElgunn told potential bidders.
They came to the Sedgwick County Extension Center at 21st and Ridge Road to bid on about 76 parcels: some vacant lots, some with buildings or homes, much of them "distressed." The property goes to the highest bidder regardless of the amount of taxes owed.
McElgunn, a lawyer retained by the county to handle tax foreclosures, explained that the property was being sold as is, with no guarantees. He told the audience he hoped they had done their homework — that they knew the condition of the property they were bidding on. And that if they made the high bid, the property would become their responsibility.
One of the winning bidders, who asked that his name not be used, smiled and said almost giddily that he "jumped in with both feet. I didn't do my homework."
He said he paid $500 for a piece of residential property in the 1800 block of South Water. For all he knew, it could be a vacant lot. Still, he said, "An empty lot for $500 ain't bad, especially in the city of Wichita. I guess I'll find out."
County officials moved the first of this year's three tax foreclosure sales to a massive hall at the extension center because of increasing interest in the auction in recent years. The sale had outgrown space in a jury room at the Sedgwick County Courthouse.
One of the questions with this year's tax foreclosure sales is whether more houses are going to auction because people are having difficulty paying taxes because of the troubled economy. It's too early to know, McElgunn said.
McElgunn and County Treasurer Ron Estes said the purpose of the auction is to collect revenue from properties where the owner has continued not paying taxes and to get the property in control of someone who will pay.
"What we want to do is collect the taxes, not get somebody out of their home," Estes said.
Property owners can still satisfy their tax debt and retain their property right up to the time it is about to be auctioned. One property owner on Monday managed to "redeem" a property just as the auctioneer was about to call for bids on it.
One of the experienced bidders, Fred Byers, had his eye on a home that ended up going for $47,500.
Byers had done his homework. He had looked at the home and learned that it had extensive damage from pets and needed new plumbing and heating and air equipment. He was prepared to pay $30,000, no more.
Byers, 71, who described himself as a "worn-out investor-landlord," said, "I look at everything as an investment, whether I'm going to live in it or not."
Looking at the audience, he recognized a number of seasoned investors, including attorneys, real estate brokers and an engineer.
There also were some amateurs.
"The first auction always has what we call 'newcomers,' " Byers said.
People tend to pay more at the initial auction each year, he said. The county has scheduled a second tax-foreclosure auction for Sept. 21 and a third for Oct. 5.
The auction works this way: Say a property owner owes $5,000 in taxes and the property sells for $10,000 at auction. The county gets $5,000 to satisfy the tax debt. A court determines who gets the rest. It could go to people who have liens on the property or to the property owner.
At the sale, the high bidder has to pay $350 in cash and the rest in check or money order.