Students often ask the question: Why do so many properties disappear from the tax sale list just before the auction?
There are several reasons why this happens. Perhaps the biggest factor is human nature.
OWNERS PAYING BACK TAXES AT THE LAST MINUTE
While many property owners wait until the due date to pay their taxes, a few take it to the extreme. They wait until their property is about to be sold before they pay the bill.
In fact, I’ve been following sales in some counties long enough to see the same person’s name on the delinquent list of tax sale properties again and again.
They could save big money by paying on time; instead they show up at the tax office shortly before the doors close on the final day.
In order to bring their account current so late in the game, they are saddled with interest and penalties far above their initial bill.
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THE MORTGAGE HOLDER MAY PAY THE BACK TAXES
Banks also play a big role in the timing of tax payments. Whenever a house with a mortgage falls into tax delinquency, the bank is notified.
The bankers do not want to pay the back taxes, and they try to convince the property owner to pay.
If the taxes are still unpaid a few days before the auction, the bank will send payment by overnight delivery. That’s how many of the nicer properties fall off the tax sale list.
OTHER REASONS PROPERTIES DISAPPEAR FROM THE TAX SALE LIST
Other dramas are playing out behind the scenes.
Some tax officials will accept a partial payment and set up a payment schedule for the remaining balance.
A few individuals declare bankruptcy a few hours before the sale (a property in bankruptcy cannot be sold at a tax sale).
Some properties have legal problems with the title; for example, an heir might have taken possession of a relative’s house without a will or probate.
The county will advertise the property for the tax sale anyway, hoping to coerce that heir into bringing the taxes current (the threat frequently works).
If they do not pay, the county might pull the parcel from the sale at the last minute.
THE PROPERTIES ON A TAX SALE LIST MOST LIKELY TO REDEEM
Nice houses with mortgages are the most likely to redeem. Lower-value houses, especially those without bank loans, are less likely. Land redeems less often than houses. An absentee owner is less likely to pay than an owner-occupant.
If I happen to be researching a rural county and have the opportunity to speak with the tax official before the sale, I sometimes ask which of the remaining properties are likely to redeem, or might be pulled.
The official might tell me: “The bank plans to pay off the Barton tract. The Smiths said that they will pay this afternoon. I will probably pull the Jackson property for legal reasons.”
This is excellent information, because it helps me focus on the other parcels on the tax sale list.
Don’t expect to obtain this sort of information in a large-population county, or in an online auction. But if you do find yourself in the position to ask, be ready with the question.
BE PREPARED AND PROFIT FROM THE FINAL TAX SALE LIST
Finally, don’t let the last-minute redemptions affect you emotionally. People have the right to pay their taxes, and they will pay right up to the end. All the other bidders are in the same boat as you are.
Research as many properties as you possibly can, and learn to identify those least likely to redeem. When you see the final tax sale list, be ready to bid on the best ones that remain.
SUMMARY
There are any number of reasons why a property may be removed from the tax sale list.
The property owner may have come in at the very last minute to pay the back taxes or set up a payment schedule. Or the mortgage holder may have paid it.
A bankruptcy would keep a property from being sold at auction, which would cause the property to disappear from the tax sale list. A legal issue with the title could also get the property removed from the list.
These last-minute redemptions usually occur with nice homes and owner-occupied property.
It’s not uncommon for properties to be removed from the list at the last minute. So your best course of action is to research as many properties as possible, and learn which ones are more likely to remain on the tax sale list.
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