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Notes -
To further put a point on what I said below, the amount the state realized for the property was likely far below the actual market value of the property due to the circumstances under which delinquent properties are necessarily sold. First of all, the only liens guaranteed to be cleared are property tax liens, and the title is uninsurable, so unless you have the time and skills necessary to do your own research you run the risk buying the property and then finding out that there's a mortgage attached to it for another $50,000 that the bank hadn't foreclosed on yet for one reason or another and if you don't pay it off in cash right now the bank will foreclose on it and you'll lose it. You can't inspect the property prior to purchase so you run the risk of serious damage. You can't get it financed so the pool of prospective buyers is limited to those who have the requisite cash. And I mean cash because they don't accept personal checks (though it is common to get a bunch of $500 cashier's checks and use those like $500 bills). Due to some redemption rules you can do all the work to prepare to buy the property you're interested in only to find out on the day of the auction that the property has been redeemed and won't be up for bid. Under others you may buy the property at auction but have to wait three years to take possession while you wait to see if it gets redeemed. And once you get title to the property you may have to file a separate ejection action if the prior owner refuses to vacate the premises.
I’ve got family in the foreclosure business and can confirm that there is a significant discount. Plus significant additional labor in ejection or making use of the property, which is the whole reason the state outsourced to the private market.
I was also thinking about an extreme case where the state forecloses based on a small fraction of the property’s value. If the state got it for (hypothetical) $1, there’s no reason they should have to play realtor only to hand a surplus back to the previous owner.
So yes, I’m fairly convinced at this point.
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