Tax sale overages process

45 Replies

As a new investor certain areas of real estate are appealing; however, the aspect of  low risk, no money down with unlimited opportunity for profit is the most sort after. We all know no area of real estate is completely free; however, the area I am referencing is Tax sale overages.

My questions pertains to the tax sale overage process:

1.) to my experienced investors can you share your story/ journey in the tax sale overage arena?

2.) once you have identified and located the individual through your respective marketing strategy, you convey to them that they are entitled money, then you draft up the legal documents to highlight your finder's fee, obtain the unearned cash and you take your fee and transaction complete.

A.)Is it really that  simple?

B.)If so what is the maximum finder's fee you can receive?

C.) what about the tax lien holders, banks, etc.?

I look forward to your responses? Please advise.

@Michael Johnson  

A.)Is it really that simple?

Yup, absolutely

But simple doesn't mean easy.  The Tax sale overage business is a dirty business. It is much harder than the gurus would have you believe. Properties that get lost to tax sale are often complicated deals. One I looked into had complex estate issues; 26 heirs of multiple generations potentially requiring multiple estates to be opened just to get permission to make a claim. The bank or other lien holders may have priority over the owners. No bank is going to pay a finders fee. 

Most of the surpluses in  my area are small amounts. I am not going to bust my butt doing something that is perceived as predatory for 30% of a few thousand dollars.

Originally posted by @Ned Carey :

@Michael Johnson 

A.)Is it really that simple?

Yup, absolutely

But simple doesn't mean easy.  The Tax sale overage business is a dirty business. It is much harder than the gurus would have you believe. Properties that get lost to tax sale are often complicated deals. One I looked into had complex estate issues; 26 heirs of multiple generations potentially requiring multiple estates to be opened just to get permission to make a claim. The bank or other lien holders may have priority over the owners. No bank is going to pay a finders fee. 

Most of the surpluses in  my area are small amounts. I am not going to bust my butt doing something that is perceived as predatory for 30% of a few thousand dollars.

 Ned, I kind of stumble across this niche market of tax sale overages. I didn't purchase any of the guru's products, I simply youtube a number of videos to get an understanding of the process. I am a engineer by trade so processes are what I understand best.

After grasping the overall concept I begun to attempt to generate my list of individuals that were entitled money by visiting the court house for the public records of the tax sale. That's when I ran into a road block within the process. So I now had the name of those individuals, but prior to me going on the hunt to find these individuals I needed to understand the following 1.) were these individuals entitled this entire sum reflected in the records and 2.) from a legal perspective, what is the risk of me not getting paid for my services due to tax liens and a existing mortgage through the bank? I guess that's where I needed additional education. 

Ned could you educate me from here? Please advise.

@Michael Johnson I suspect yes to the amount but I can't speak specifically to your state.

Mu guess is that the name listed is the property owner. That does not mean they are entitle to the money. It could be a bank that has a mortgage for example. Then again your state may say the owner is entitled and the bank has to go after the owner to get their  money back

Some states limit the amount for finders fees. Do you know the NY times test?    .     .     .  

Don't do anything you wouldn't want your mother to read in a headline of the NY Times.

Feb 26, 20

               The New York Times

                                                     today's headline

68 year retiree scammed by tax investor Michael Johnson

Get the point?  LOL

PS intended as a joke. I hope your mother doesn't Google that!

Working in a tax office I have seen that it doesn't matter what you price that you offer your client in terms of locating excess funds from tax sales. In Texas the District Clerks are only allowed to discuss amounts due (overpayments), with the owners only, not locating services; not even mortgage companies. So that headline by @Ned Carey   would be really accurate here. And that is bad for business anywhere. 

@Richard D.   If you got a power of attorney I am not sure the District Clerks would have the legal right not to talk to you.  However that doesn't mean they will follow the law. Governments often brake their own laws and as the saying goes "You can't fight city hall"

Baltimore city instructions on how to claim a bid balance say you must have a power of attorney.

If you chose to pursue this @Michael Johnson I am sure the attorney that writes up the agreements for you will say you need a power of attorney. 

PS while the tax sale office may not care there may be law that otherwise limit the fee you can collect.

@Ned Carey you are absolute correct on a couple different fronts. 1.) There is a limited percentage you can charge the claminant, 2.) Being careful with the business model.

Due to my lack of knowledge in this area and with me being extra conserative, I actually contacted a tax attorney to seek his advice of the feasibility of the business and he informed that I should be careful and do my due diligence upon who is entitled what before proceeding. He also proposed the obstacles of lien holders and existing mortgages. Fortunately within the State of Georgia, the claimant is entitled the money and the bank does not have access to those funds; however, I have not quiet figured out the impact/ obstacle of the lien holder.

From my research the legal documents in which I would need are the following to act and control the business of the recipient:

A.) Power of Attorney Contract

B.) Contract highlighting my Finder's Fee, Transaction Process of funds going to Attorney Office and the law office distributes the funds

@Richard D. Am I forgetting anything?

The biggest roadblock for me was 1.) Understanding how much each claimant is actually owed following the lien holders, 2.) how to identify if tax liens are on the property (I would think if the property has been sold that the bank cleared the title. What do you think?)

Tax overages are an old, old game with much more hype than actual opportunity.  I would be amazed if a mortgage holder didn't have a claim to overage funds, over an owner.  In Florida there is a12% cap on the fee, along with affidavits signed by the owner that they don't need any service, and how to collect any overage without them.  Reading your state stautes and actually talking to your local tax office will be enlightening

To what extent can mortgages survive a sheriff's sale? Only government debt survives here, no last minute find of a contractor's lien. The Lis Pendens should usually be the final word on liens, I use them as free title searches. In the States that use that process. The first post said 30% fee, that's insanely greedy. Either 3-7% or a fixed fee that covers the most likely small amounts so ask for 3-5 grand, tops. More only if you recover over 50,000.

I called a local county office and he basically said just because someone comes in saying they're the only heir and can claim it, doesn't make it necessarily so. Said they'll have to go through probate. What if the deceased didn't have an estate, will, power of attorney, or anything of the sort?

Honestly, I really don't know, sorry. That might be a conversation to have with an attorney.

Depending on the overage, it may not be worth the effort.

I pray that it all works out for you!

It been 4 years since you posted this about Tax Sales Overage, now this is the new way to make  money in Real Estate today. There are three states that you can not implement this strategy one of them is New York. I had stumble across a webinar in regards to it. I hope your making money. 

Hello Ms. Tammy Morton. I'm working the tax overages business as well. Primarily just as a researcher for now. I'm still waiting to close my first deal. Are you currently working the business? Snd if so, is there any insight that you can share with a newbie in the business please?

Hello @Tyrone Harris, I am also in San Bernardino, CA. I would like to know if you'd be willing to share how you got into the overage business. I see courses out there that are well over my budget. Are you currently learning this business on your own? Thank you. 

Hello Miss Ehriqa. I found a company online called Surplusfundsriches.com. They're about less than half of what some of the other companies charge. They teach you how to research title and a person's debt, and they will actually do all of the skip tracing for you to close the deal, so it's a good place to learn the basics and build a solid foundation of how it works. However, for every deal that they close, they only pay out about 8% of the amount they recover. That's still not bad, because 1 deal will pay back what you invested to get started. Then as you get more experience, you could possibly start doing on your own or pay for more training to make more money. You can check them out on YouTube to see more of what they're about. I currently have 3 deals in the pipeline, still waiting for my 1st deal to close. Feel free to reach out to me if you have any more questions! 

Be blessed....

Hi @Tyrone Harris! I too have been listening to Surplusfundsriches and trying to decide if I am going to purchase. I've read some reviews and it's made me a little hesitant. Sounds like you are happy with them so far. Do you know what all you need to do prior to doing this own your own...business license, website, LLC, attorney etc. Any help would be greatly appreciated!

Have a good day!

Hello Miss Tammy

No, you don't need any of that. Once you purchase the product, and by the way, they offer more than one program. The one I purchased is specifically for overages as a (researcher.) But once you purchase, they will send you a link to sign in and create a user profile. The program comes in the form of a pdf file. They recommend reading through it a couple of times to get familiar with it. Inside the pdf is another link that takes you to their resources page. In there are a bunch of videos on how to do title researches, finding overages lists and how they want you to fill out and submit the forms. There are also a bunch of updates on how they want the information filled out, what to do, what not to do, etc... Because I was new to all of this, I have to admit that it was a bit confusing at first. But again, as you go through the material a few times, it starts to make sense! So basically, you're doing the initial research as far as finding an overage list, finding the actual documents that they need, filling out the submission forms and emailing them the file. After that, they will contact the people who are entitled the overage and negotiate with them. They have their own attorneys and all of that. If they can close the deal, then we all get paid.  As I said before, I currently have 2 deals in the pipeline and I'm eagerly waiting for them to close. As of now, I have yet to be paid. They say the average timeframe is about 60-90 days, if all goes well. I've had a few of my submissions kicked back because I didn't submit some of the info the right way. It's a (simple) process, but not always (easy)! But if it were always easy, everyone would be doing it right???

I hope this helps!

Be blessed.....

@Tyrone Harris @Tammy McBride I think k the fallacy of this system is that this company probably has multiple people working as “researchers” in your area, all going after the same leads.  I also suspect the vast majority of this company’s income is in selling folks like you the system and Very little from actually collecting the surpluses for people.

One thing you guys need to realize, at least in my area, there are only one or two firms making any money at this, and it’s only part of what they do.

AND....those few people that are Acrually making any money at this are contacting the people owed a surplus THE DAY OF THE SALE, by email and cell phone.   Once you find a “list” of people owed a surplus, YOU ALREADY WAY TOO LATE.  I can assure you, the people selling you this program know this.

@Wayne Brooks Thanks for the info, but I believe they've address that as well. Inside their resources page, there is also a list of submissions that have been already researched to avoid any duplicate submissions. This list goes back for several years. That definitely helps and saves me a lot of time before starting the research on an individual. So, I'm just optimistic enough to give it a shot and see if they will deliver on what they say! 

Stay tuned....

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