Tax Liens in Baltimore City

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Tax Liens in Baltimore City

Patrick G.
Abingdon, MD · Member since 2013 · 193 posts · 60 votes

Hello, I have a questions specifically to the tax lien sales in Baltimore City. (The auction is next week.)

To get right to the point. The question is can I purchase a tax lien certificate after the auction and subsequent “Assignment Sale”?

The longer version. The auction is held on-line on May 20th, 2013. Later in the week, the City attempts to sell the remaining tax liens through the Assignment Sale on May 23, 2013. According to data from previous years tax lien auction results and Assignment sale results, there have been left over tax liens, that do not sell. On Baltimore City’s frequently asked questions page #29 specifically states “Subsequent to the Tax Lien Certificate Sale and Tax Lien Certificate Assignment Sale, Tax Lien Certificates are assigned on a first come-first served basis and can be assigned over-the-counter directly from the City. They may also be assigned by mail. All certificates are freely assignable.”

I sent the auction help desk an email to inquire about this process, however, they only handle the auction and could not assist with what happens afterwards.

My hope is that I could purchase a single small tax lien certificate to get my feet wet, test the waters and learn the process. The main benefit to purchasing after the auction that I see is not having to pay the $100 application fee. (I would be too late even if I wanted to) The downside that I see is that I will only have all the left over options, but from what I can tell from past years the left overs seem to cover the whole spectrum.

Thanks for your time,

Patrick

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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
13y

I only went once to the AA county sale. I got blown out and never went back.

Risks in tax sale
Bankruptcy - usually just ties up your money longer.
IRS lien - never happened to me, likely not a problem if it does show up.
Fire - Happened to me once but the property redeemed anyway.
Voided lien - In Baltimore you only get your principal back but no interest and you could be out attorneys fees.
City Screw ups - Perhaps the most likely risk is the city will screw up and you will have to take a lot of time to get the issue corrected.

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y

    Patrick Gessleman I am working on the tax sale as we speak. Just taking a short break to check Bigger Pockets.

    Yes you can buy liens from Baltimore City "Over the Counter." This is exaclty how I started. I bought two liens from the leftover list and I was actually able to foreclose on both and take the properties. The profit on those deals was substantial but I was the beneficiary of the sharply climbing market.

    The process is go down to the Municipal Building on Holiday street and buy the leftover list. It will cost you $4.00. Go through that list and look for something you want to buy. Then you go to the tax sale office in the same building to purchase the lien. You will need certified funds to buy the lien. The list will be available typically about 3 weeks after the sale.

    Good Luck - Ned

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  • Morris Lucas
    Rental Property Investor · Atlanta, GA · Member since 2012 · 256 posts · 64 votes
    13y

    Nice. i haven't been home in a while, i may buy a couple when i go back to visit first week in June, hopefully there are still a few left.
    Good thing about bmore is it's such a small city you can basically get to any property within 20 minutes if you want to check it out.

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y
    Originally posted by Ned Carey:
    Patrick Gessleman I am working on the tax sale as we speak. Just taking a short break to check Bigger Pockets.

    Yes you can buy liens from Baltimore City "Over the Counter." This is exaclty how I started. I bought two liens from the leftover list and I was actually able to foreclose on both and take the properties. The profit on those deals was substantial but I was the beneficiary of the sharply climbing market.

    The process is go down to the Municipal Building on Holiday street and buy the leftover list. It will cost you $4.00. Go through that list and look for something you want to buy. Then you go to the tax sale office in the same building to purchase the lien. You will need certified funds to buy the lien. The list will be available typically about 3 weeks after the sale.

    Good Luck - Ned

    Thanks Ned, I was hoping you would respond. Your blog has been a great help to me this past year. That is a huge encouragement that you have started out the same way. I am definitely doing this as soon as the list is released.

    I can't deny I have my hopes up of being able to foreclose on a property. But I am really just excited to start the process and get involved with real estate. Most likely I will earn 18% on my investment for a short period of time, and worst case scenario, the City will tell me there was a mistake and refund my check.

    Of course I will be certain not to put my small investment on a small portion of an alleyway.

    Morris Lucas, Hopefully I bet you there. I will gladly email you my list when you get to town if you need it.

    1Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    13y

    So if I understand this correctly the "bids" for the lien certificates are a fixed price?? Meaning if 5 people want one house they all just bid the fixed price and then one is randomly chosen as the winner??? Or does it mean if they bid the same price??

    Off the Baltimore site:
    "If more than one bidder submits a bid for a certificate, the certificate will be awarded at random."

    I may have overlooked but Ned Carey do you have any posts on your blog as "a noobs guide to tax certs in baltimore city"

    1Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y
    Originally posted by Chris K.:
    So if I understand this correctly the "bids" for the lien certificates are a fixed price?? Meaning if 5 people want one house they all just bid the fixed price and then one is randomly chosen as the winner??? Or does it mean if they bid the same price??

    The auction is a bit complicated, Ned could certainly explain it better. But to answer your question: No, the bids are not a fixed price. There is a minimum bid and the highest bidder wins the Tax Lien.

    Originally posted by Chris K.:
    Off the Baltimore site:
    "If more than one bidder submits a bid for a certificate, the certificate will be awarded at random."

    I did not see that on the www.bidbaltimore.com website, however I may have missed it. Perhaps if two people bid the same amount it is assigned at random.

    Here are the basics of the bidding happening next week:
    Minimum Bid = Tax Lien Amount
    A high bid premium (HBP) kicks in at 40% of the Assessed Value
    HBP = (Bid - 40% of Assessed) x 20%
    If you win, you need to pay the Tax Lien Amount and the HBP immediately.
    If you foreclose in 6 months, the rest of the total bid is then paid to the City.

    I hope that helps.

    1Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    13y

    Thanks Patrick I think my confusion comes from (if i read correctly) there being 3 different sales.

    1) Initial Bidding online
    2) Mayors Assignment sale
    3) Over-The-Counter Assignment sale

    I think the quote I asked about earlier is for the Mayors assignment sale and not the initial bidding. I got the quote from

    https://www.bidbaltimore.com/main?unique_id=UZhKeQoJEgEAABXOU8c&use_this=serve_document&document_id=122

    I read thru all the documentation and feel like I have somewhat of a grasp on how the actual buying works. I'm curious what type of research/due diligence needs to be done before buying a property. Seems like it would get expensive getting a title search on 4-5 properties that I plan on bidding on. Thanks for the help

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y

    Chris K. you are right for the online assignment sale the liens are all offered at face value.This is for the liens that did not sell at the original auction. If more that one person wants a given lien the computer will pick a winner at random.

    I don't specifically have NOOBs guide for tax liens but I have a lot of posts on my site about tax liens. Go to the tax lien category to see all the posts. Some of the best info is in the comment section of the posts.

    The main due diligence is knowing what the property is worth. You biggest risk is bidding too much. You need to make sure the property is worth more than you bid and costs like legal fees. I look at virtually every property I bid on.

    However I never do a title search. I don't care who owns it and I don't care what is owed on it. That all gets wiped out in the tax foreclosure. I May do some quick online research on some liens but there has to be something that makes me want to check. - Ned

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  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    13y

    I see you do AACO also, does it work similar to Baltimore city where the tax sale can wipe out a mortgage?

    Other than you overbidding the value of a property are there any other risks of losing money??

    0Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y

    I only went once to the AA county sale. I got blown out and never went back.

    Risks in tax sale
    Bankruptcy - usually just ties up your money longer.
    IRS lien - never happened to me, likely not a problem if it does show up.
    Fire - Happened to me once but the property redeemed anyway.
    Voided lien - In Baltimore you only get your principal back but no interest and you could be out attorneys fees.
    City Screw ups - Perhaps the most likely risk is the city will screw up and you will have to take a lot of time to get the issue corrected.

    3Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    Good Luck Ned!
    Today is the day!

    0Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    13y

    How'd it go yesterday Ned Carey??

    0Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y
    Originally posted by Chris K.:
    How'd it go yesterday Ned Carey??

    This was my best year ever. I had a bigger pile of money than ever, and I was able to place it all at prices I am excited about. We were better prepared than ever before and it paid off big time.

    I am now scrambling to find more money for the leftover liens. Thanks for asking. - Ned

    3Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    Great Job Ned.
    I've gone through the results of the auction (or really I have looked through the left overs) and I’m waiting anxiously to see what happens tomorrow at the assessment sale. Afterwards, I will use the results of the assessment sale to narrow in on 3 or 4 possible liens I would like to purchase and I think I will just head over to the tax sale office and inquire about the process of buying them.

    Do you have any general advice for a complete novice on which types of listings to stay away from?

    Thanks again,

    0Reply
  • Jamaal Hunt
    Wholesaler · Brooklandville, MD · Member since 2013 · 149 posts · 29 votes
    13y

    Once I get paid (hopefully) i place consideration in getting me a lien to properly get my money up on this "18%" investment.

    0Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    13y

    Patrick where are you getting the sale results from?? I looked at the bidbaltimore site but when I try to look at the list it just says "no auctions running".

    Also does anyone know if the $100 registration free is per year or for life??

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y
    Originally posted by Chris K.:
    Patrick where are you getting the sale results from?? I looked at the bidbaltimore site but when I try to look at the list it just says "no auctions running".

    Also does anyone know if the $100 registration free is per year or for life??

    Chris, You have create an account and log in. There you can search the results of all the previous auctions. On Monday when the Auction was actually happening, they were really quick about posting the results every hour.

    The $100 fee is per year. This is the main reason I am choosing to go with an over-the-counter sale. I’m only looking to invest a small amount (below $1,000) so that $100 will rob all my profits.

    3Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y

    Patrick G. Jamaal Hunt If you pick out some liens, I will be glad to give you my feedback on them. - Ned
    Contact me off line.

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    Thanks Ned Carey I will take you up on that. I have a few that I plan on driving by on Monday.

    0Reply
  • Jamaal Hunt
    Wholesaler · Brooklandville, MD · Member since 2013 · 149 posts · 29 votes
    13y

    Ned Carey
    I got you. Wednesday is the day of closing and I have your business card. Im taking off that day.

    0Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    13y

    So I'm curious what happens in the event that there is major damage done to a property that you buy a certificate for.

    For example you pay $10k for a tax cert for a property that you drove by and it was in good condition prior to bidding. Between the time you forclose on it some crackhead breaks in and drops their lit pipe that burns the house to ashes. Are you just out of your $10k or do you have any recourse??

    0Reply
  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    That is the biggest risk Chris, you can either walk away and lose the 10k, or foreclose and hope it auctions for enough to get some of your money back. Ned said he had one that burned, however he lucked out and the owner paid the taxes on it.

    0Reply
  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    13y

    Chris K. the answer Patrick G. gave you was right on.

    Most liens are below $5,000 in fact our average lien this past Monday was $2300. Fire is just one of the risks. There is no risk free investing. However as Patrick said with well over 500 liens purchased I had only 1 fire and that was not a complete gut. The owner redeemed, my guess is there was insurance on the property and it was paid out of that. - Ned

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  • Patrick G.
    OP
    Abingdon, MD · Member since 2013 · 193 posts · 60 votes
    13y

    Well, As a quick update. The Auction and subsequent Assignment Auction are over. After a discussion with Ned, I realized I was unaware of all the cost to foreclose on a home from a tax lien, and needed to be prepared to pay more out of pocket, should I have the oppurtunity to foreclose on the property.

    I was able to discuss things with my Brother, who decided he would go in with me on the first property, we can split the cost/profits and use this experience as a first step.

    I was able to call the Tax Collectors office and find out that they are expecting the official list to be available later this month, (exact time is unknown) and that they now accept major credit and debit cards. This will save me a trip to the bank!

    I just read Ankit Duggal's recent blog on Tax Liens in Jersey City, NJ. Which was very helpful. My major take away from that was that the process in Baltimore seems MUCH easier than in Jersey City.

    My other take away was something I haven't considered, that Ankit mentioned. I have been viewing the results of the Assignment Sale as my "Ultimate List" I've done all my research on those items, I have my favorites on that list, and my plan is to go right to the Cashiers Booth and pay for the first Lien on my favorites list. However, Ankit mentioned that the Actual list of available tax liens will be the results of the Assignment Sale (Pretty much all the junky left overs) PLUS any tax lien that was bid on and won in the auction but not paid for. So if a bidder, bit off more than he could chew and won tax liens but didn't pay for them, they will show up on the City's updated list at the end of the month, but they will not be on the list I have been working with.

    Is it worth taking the extra time to see what becomes available, or should I just march in and pick up one of the tax liens I've already selected as quickly as possible?

    0Reply
  • Christina R.
    Investor · DMV Maryland · Member since 2013 · 867 posts · 370 votes
    13y

    @Patrick G - that throws a monkey wrench in it, doesn't it?? But it's nice to have options like that and it sounds like you are very prepared with knowing the properties. Good luck!

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  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    13y

    Am i correct that the cost to forclose on a property is around $2500 in legal/paperwork fees??

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