Okay, before I found Bigger Pockets I actually paid for a coach/mentor that I met during an unrelated business transaction. I wish I hadn't; I guess he's sorta mentoring me, but not really. Nevertheless, he recently sent me an email that contained the following:
"Now let me tell you about something that came to me. In all of the counties across America houses are being seized for back taxes and auctioned off. After the auction the county takes the back taxes out of the proceeds. The remaining money goes into a fund for three years. It varies from county to county. The family who lost their home is entitled to that money. 90% or more do not know this. The only thing the county does is after the auction they send a letter to the address of the house the people no longer live in to tell them about it. Only one letter! This is a crime. The term for the process of identifying the money as abandoned and moving it into county coffers is called "escheatment". So there has been an ongoing business of locating the people and working as their agent to get the money to them. Usually the fee is 30%. Some of the counties have legislated the allowed fees collected to protect the losers of the homes so they get more of their money. Ha! It is really to try to reduce people from going into this business so the counties get to keep the money they are stealing.As a coach my job is to get you to do things that will move you forward. So now I am going to put one on the table for you to think about. The best company I have found charges $1600 for everything needed to do this business..." You can guess where the rest of the email heads. Now I am not a professional, so I am speaking from my own experience... In my own short sale in 2010 I was told that if my house sold for more than the asking price I would get the difference. So I see some of what he's trying to say, but I didn't think that applied to tax lien properties. I don't plan on getting into with him, but I am researching it because it just sounds strange. Has anyone ever heard of this before?
I have heard of it, saw a hook for a webinar - read the scrip - passed. It looked too good to be true - Easy Money - not going to happen. You have to work a deal with the former homeowner who has the funds coming is what I read. Yes, the money is there, but getting any gov entity to just hand it over is work. I hope you can get some feedback from some who are successful in this new?? twist, I am sure there are a lot doing it - just why does it cost so much to get in??
Dang it... I had a long response typed out and then hit a key that erased it all... anyways, I hope I remember everything I typed....
I have heard of what you described, but I don't know of anyone actively doing this. I recently attended a tax sale in my county. Buyers were paying a lot of money over and above the taxes that were owed. I was amazed and wondered why they were doing this. They weren't necessarily getting bidded against for the larger amounts. I know that they get 12% of interest on any overpaid amount up to 15 percent over what the taxes are, so that can't be the only reason. I think it might be because the owner has 3 years to pay back the taxes and any overage plus interest to the buyer or they lose their entire property. If the buyer pays enough down, maybe the owner will walk away. That is the only reason I can think of for these large overages.
That said, the county revenue agent acted as if these overpaid funds were already part of the county's revenue, leading me to think that they don't give the owners much opportunity to recover the overpaid amounts. If I were an owner, I would definitely want my share of that payment if I can't redeem the entire amount! I kept a record of the winning bids and was wondering if I should contact these owners myself (for the larger amounts) and let them know for a small fee. Not sure though.... should I profit from their loss, or am I doing them a service...
I have heard of this but it was coming a lawyer that was going to help the company I was working for go and get the funds and take some large percentage and what I was hired to do.
I've heard of this as well. However, the issue is that once you've informed somebody that they have escheatment money coming to them, it's a super simple process for them to just contact the government to get the money themselves. They don't need you in the slightest.
In Colorado, it's as simple as going to a website, entering some personal identification information, uploading your driver's license to prove it's you and the check comes to you in a couple of weeks.
I see this as a public service campaign. Spend postage, letter and toner to let the people know about the money. It's nice of you, but I don't see you pulling in large amounts of money unless you misrepresent the process as very difficult and something that they really need you for.
@Linda Williams-Jasper I have heard of it. Each state laws are different and within those states each county can do it their own way as well within the confines of the state law.
I would say this I can not imagine there being enough of these situations to make a living at it. My experience relates to the foreclosure sale (again different in each state) not a tax sale. If amount bid for the property is in excess of what the lien and fees are the rest "goes to the owner". That was the whole idea of the system back in the day before the internet and computers. From what I've seen, only 1 in 100 properties actually sell at auction. Most that do sell, go for the lien holder bid amount plus $1. Also in my state junior lien holders have the right to buy out the senior lien to protect their position as well. That coupled with all the people chasing equity in the pre-foreclosure world mean that very few of the properties go for more than the lien amount. I bet there is more money to be made in selling the "everything you need" start-up kits than in the actual implementation of the plan.
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