Today I’m answering your question about delinquent tax auctions, and the topics I’m going to cover are:
- Bargain Real Estate Sold at County Auctions
- Half of the Counties Sell Tax Lien Certificates
- Tax Lien Certificates Are Secured by Real Estate
- Buying Property at Tax Deed Sales
- Get Amazing Discounts at Tax Deed Sales
- County Auction Rules and the Role of the Treasurer
- The Treasurer Controls the County Auction
- Can You Make Money on Tax Deeds?
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Bargain Real Estate Sold at County Auctions
Across the United States, there are 5,000 tax defaulted auctions annually spread out over 3,000 counties. The challenge with delinquent tax auctions is where are they, and when can you get involved?
All of the counties are separate entities and control their own auction process. Many students use my thumb drive, which is a directory that gives them access to all US counties from a computer with an internet connection. This is a business of abundance.
I’m Ted Thomas, and for more than 30 years, I’ve been involved in the tax defaulted properties business and have attended countless auctions. Today I’m answering your questions about the delinquent tax auction.
Half of the Counties Sell Tax Lien Certificates
Starting with the basics, all of the county governments are authorized to have tax defaulted auctions.
About half of the counties will sell tax lien certificates, and these counties are considered to be benevolent. What does that mean? It means these counties do not throw the homeowner out of the property.
The property owner is in default of taxes, and the county treasurer announces to the world that the property owner has not paid property taxes and anyone with money who would like to pay those property taxes is welcome to do so.
Those who purchase these certificates could earn outrageous interest rates in amounts of 16%, 18%, 24%, and even up to 36%.
Tax Lien Certificates Are Secured by Real Estate
The tax lien certificate is secured by the real estate. That simply means that if the property owner refuses to pay the tax lien certificate plus the outrageous interest rate, the county government will allow the person who did pay the taxes to become a new property owner after going through a short legal process.
The county wants money to pay the county’s bills.
- Step #1 is for the county to put the property in default.
- Step #2 is to advertise on the county website and in the local newspaper that the tax lien certificate is available at a delinquent tax auction.
Delinquent tax auctions are always public auctions where anyone can attend. Anyone is allowed to purchase, although you should have money before you bid. Otherwise, you may have legal challenges. The process is unique to each state.
Buying Property at Tax Deed Sales
The next delinquent tax auction I’m going to explain is the tax deed auction, which will likewise be announced on the county website and simultaneously in the local newspaper.
If the county is unable to collect taxes, the treasurer is authorized to seize the property, move the former owner off of the property, sell the property at auction to the highest bidder, then use the revenue to pay the delinquent back taxes.
As part of the auction process, the treasurer will by law cancel the mortgage or deed of trust loan.
Get Amazing Discounts at Tax Deed Sales
A tax deed auction is an opportunity for the savvy, educated auction buyer to purchase real estate from the treasurer for just pennies on the dollar. The properties are generally used and abused, and most bidders will start with low prices like 10 to 20 cents on the dollar.
Auction buyers usually compare the auction prices to the neighborhood comps where they’re buying because the tax assessed value may be different from the market value. Most auction buyers will be surprised to see auction prices beginning at 60%, 70%, and 80% below the tax assessed value.
It’s a public auction, and anyone can attend and bid.
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County Auction Rules and the Role of the Treasurer
Depending on the state, auctions can be different. The county treasurer is in control of everything that happens regarding the auction before and after. I’ve personally observed a county treasurer interrupt an auction and lower the price to make the sale take place.
The county does not want the property. They already own the schools, admin buildings, parks, and other infrastructure. They do not want tax delinquent properties. Instead, they want property on the tax roll and people paying taxes regularly.
The Treasurer Controls the County Auction
The treasurer has the ability to change prices and cancel any property from the delinquent tax auction at any time and does not need to justify or explain it to anyone.
Local procedures will be on the county website, and the county will be especially detailed about how properties are paid for.
The county treasurer is an official of the government and has full authority to make a decision and power to remove people who do not follow the rules. Sheriff’s deputies are at the treasurer’s disposal.
It would be an understatement to say that most auctions are orderly, move quickly and are places that benefit the government and attendees.
Can You Make Money on Tax Deeds?
In a local county with only a small population just north of Tampa. Florida, my student only invested $9,000 at a delinquent tax auction. The property was a used and abused single family home.
The tax assessor valued the property at $91,000. Using techniques he learned in our training, my student found comparables, including at Zillow, which determined that the value was over $200,000.
My student sold the property to a tenant for $5,000 down with an option to buy for a purchase price of $140,000. Ask yourself, would one deal like that a year make a difference in your life?
We hope you enjoyed Ted’s lesson on “Buying Tax Sale Properties at a Delinquent Tax Auction”
There are 2 main types of delinquent tax auctions, the tax lien certificate auction and the tax deed auction.
Tax lien certificates are secured by real estate and pay interest rates of up to 36%, but you only get the property if the certificate is not redeemed. At a tax deed auction, mortgage-free properties are available for pennies on the dollar, and you purchase the property outright.
If you’d like to know more about delinquent tax auction investing, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.
Learn how to reap huge rewards from tax lien and tax deed investing! Get started today by taking advantage of this Free Gift from Ted. Act now, it costs you nothing and will give you a big head start!
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.