Rental Property Investor · AZ · Member since 2013 · 213 posts · 50 votes
I have a question about lottery-type tax lien sales that I'm hoping someone can help me with.
The treasurer's office lists this information on their site:
"A participant of the sale cannot pick and choose properties for purchase. Instead, the treasurer announces each delinquent property by owner name and amount due. After each announcement, a number is drawn. The participant's number which matches the number drawn has the option to purchase the lien or pass. In the case of a pass, another number is drawn until the lien is purchased. This process is repeated until all liens are sold."
So, the way I see this is, I don't have to bid against anyone else? If my number gets picked and I choose to purchase, it's just going to be me? And if that's the case, I would only have to bid the minimum opening bid and I would get it?
Also, if anyone has participated in these types of tax lien sales I'd be grateful to hear about your experience.
Here is how it works:
The treasurer in your market may have a different procedure.
Prior to the lottery, each person attending that wishes to purchase is assigned a number.
The property/lien/certificate ("assets") that is being sold is announced.
A computer puts all the numbers into a random order, and displays it.
They call the numbers in order, one by one, and asks if that person wishes to purchase.
Once someone affirms that they want to purchase, they stop calling numbers.
That person gets to buy the asset at the posted or announced price.
If the purchases fails to pay by the following day, then its sold at the posted price, first come first serve.
They repeat the process for each individual asset.
To answer your question, there is no bidding, If you get picked and choose to purchase, its all yours. And in that case, you just pay the posted or announced price.
Again, your treasurer may have a different procedure.
There are some strategies to maximize your opportunities at these types of sales. Let me know if you would like me to further describe.
Thanks Jesse Tsai, I appreciate your information. I am planning on attending the yearly sale on August 1st and want to learn all about this beforehand. What you described sounds like what my county does, according to what I've found on their website. I would definitely like to hear the strategies you have in mind.
Michelle Y. Normally I'd jump in and talk liens with you, but I have never been to an auction with that type of bidding. I've read about them, but never participated.
Jerry K., yes it is a Wyoming auction, here in a town of about 100K people. I'm pretty excited to go see what it's all about. They only have it once annually, in August. I'll try and remember to post if I bid on anything.
Michelle Y.· Cheyenne, Wyoming
I have done several of these sales in Wyoming. There is no bidding it is lottery only due to the interest. When the tax lien is a certain amount past due the tax due is the only amount it is sold for. You get interest at 15% and a 3% one time penalty. I believe you must hold the tax property and buy the lien for the next 3 years, if not redeemed by then you apply for a tax deed or a sheriffs title.( Sorry have not done this for awhile) Then you hold that title for about another 6 months or 1 year and get a final title. There are several public notice and mailing requirements for the final title and some title insurance companies require you do a quiet title action to perfect title. I will send you a private notice as well with a phone number if you have questions or want the cite on where to read up on them.
Thanks Jerry W., I would appreciate any further information you can give me as well as the site on where to read up on these (the Laramie Co. website didn't go into much detail and I might have to go to the courthouse and just talk to someone there - gotta love small towns!). I've heard most of these are usually paid by the owner within the year (a nationwide statistic, not necessarily Wyoming) which is more of what I hope for due to the 15% payout. But just in case I do end up acquiring a property I plan to do due diligence as the addresses are published in the local paper a few weeks beforehand from what I've heard.
Jesse Tsai, I see you are in Vegas, I've attended 2 auctions and the problem I've found being an Individual buyer is that there are a bunch of pool investors in this type of 'auction'. Its frustrating to have the cash burning a whole in your pocket and watching these people sitting together getting all of the liens because they are working together and have multiple chances.
the tucson city government auctions off improvement district liens like this, top interest is 20% if they don't pay in 9-months (10% if they pay after 6mos).
problem as troy points out is that one of the bidder/buyers brought his whole office staff.
I never really frequented these auctions. Others may have a different opinion about this, I don't see any problem with bringing friends, or staff to the auction so they can have a chance to win too. They are public auctions after all.
I attended a couple at the end/beginning of 2011/12. Ran into the Same problem both times. Had cashiers checks burning a hole in my pocket. But it seemed to me that each lien went to an investment group. Of course if I could get a group together and field an investment pool with local investors that would be great.
I feel like 12 months ago was the best time to buy while all the banks were confused with the new robo-sign law in effect. It would be easier to cause a foreclosure on the properties. But if it gets amended and cleaned out to allow more foreclosures in the next 6 months that opportunity will fade away. But who can argue with 12% anyhow, right?
I looked into these, but have not participated (too far away). One Wyoming county had ~400 liens with 200 bidders. If you only have one bidder number for your money it will be tough to get more than 2 liens.