Tax Deed Sales Monopoly?

Question

Hello BP world! It as been a while since i have posted but i have come across something in my market and I am curious to see if it is the same anywhere else besides Florida. I have been looking at tax deed sales in my area he margains are pretty amazing but as I look at the sales records to see who he players in my area, I continue to see the same name US Bank % (xyz company). I found this article that was interesting and wanted to share it as well as hear everyones feedback.

http://articles.sun-sentinel.com/2013-05-03/news/fl-inside-florida-tax-lien-market-20130428_1_tax-liens-tax-collector-south-florida/2

Wayne Brooks · Answer

@Michel Steele yes.  When someone buys a Certificate (loans money to the tax collector) if the owner doesn't redeem/pay it off, the certificate holder must send it to a tax deed auction, where the certificate holder has no advantage.  The tax deed auction is where the actual property is sold to satisfy all the outstanding Certificates. Assuming the property actually sells for enough to cover all the taxes, the Certificate holders get paid off.

Jerry K. · Answer

@Michel Steele The article Manny had was from 2013. The counties in Florida that do online auctions have been adding rules to eliminate the institutions that can open hundreds of thousands of accounts. The number of bids are way down since 2013.

Those institutions then moved to Arizona where many of the tax lien auctions are also online. I keep track of all the results in a few counties in AZ. In 2011 for Yavapai county, the total number of bids for all liens was 280,000. In 2012 the number of bids jumped to 7,000,000. In 2013 it peaked at 99 million bids!

Yavapai added the same rules as the counties mentioned in the article in Florida and thus in 2014 the total bids dropped to 18,800. And in 2015 the total number of bids was only 10,525. So the counties are leveling the playing field.  Also, the banks seem to be dropping out as they are finding other avenues for safe interest rate returns.

I have some of these online auction stats in a BP forum post I do after the auctions are complete each year.  The 2015 Yavapai county result summary post is this link.

Patrick L. · Answer

Those are just the tax lien auctions, not tax deed sales.  They're just funds investing in liens happy to make the minimum interest rate (5%).  They aren't buying the property, if they lien doesn't get paid then it can be sold at a tax deed auction.  Holding the lien gives you no extra ability to buy the property at the tax deed auction but you would end up with it if nobody bids (in which case you're probably getting stuck with junk)

Wayne Brooks · Answer

Too many bidders, paying stupid prices.

Jerry K. · Answer

Can't say it any better than Wayne. I will add one point. Tax deeds rules differ in each state that sells them. Florida tax deed sales result in the buyer of the deed owning the real estate right away. In other states, even after a tax deed is sold, the original owner might still have a time period to redeem the property.

Michel Steele · Answer

Wayne,

Thanks. We are in the same neighborhood(SOFLA). Have you purchased any Tax Deeds?

Michel Steele · Answer

Jerry,

Thanks so much for that clarification.  i'm still not sure i understand the difference between a Tax lein Certificate and a Tax Deed. I know that a Tax Lein is paying the taxes owed and then you wait for maturity(owner pay taxes) if they do you can collect interest and your investment back.  What i don't understand is if you buy a Tax deed do you own the land or property you bid on? I live in Florida and when i look at the two different areas for Tax Lein and Tax Deeds they seem to intersect.

Emmett R. McCarthy · Answer

Many lenders to tax buyers require that the tax lien certificates be held by a custodian rather than the tax buyer in order to make sure their collateral is secure. Hence, "US Bank as Custodian for [tax buyer]."

Michel Steele · Answer

Manny,

Thanks for the article. Very interesting and disturbing. Kinda reminds me of couponing. Some people started hitting it big, did a reality show, now all the grocery stores have changed the game.  Maybe the Tax appraiser offices will eventually do the same.

Manny Cirino · Answer

Emmett you may be right that is what it appears to be as I see many different companys along with US Bank. I will say that in Polk County they're purchasing well below 70% LTV and not all of it is trash. Wayne West Palm is a whole other beast I have been watch West Palm market as I been looking to get in there and I see a lot of over paying going on out there

Tax Deed Sales Monopoly?

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