Current tax sale trends. Post 67

Mitch Goldstein | Coach Mitch | December 28th, 2007

Coach Mitch’s REFLECTIONS

Property values are high

In the last decade, in the northeast, south, southwest, west and other areas of the country, property has become very valuable. These days it is likely that a higher percentage of property owners will find a way to pay off a tax lien on their property.

Loans are available

Even with stricter guidelines, banks are refinancing homes. It is typically a safe loan. The properties have been raised so much in value that the increased equities almost demand that the owners actively try to save the property versus not caring if they lose it.

Enterprising owners can get financing, even against vacant land. There are a greater number of non-traditional lending sources that will lend against assets, not just using credit as the standard. Labeled “hard money” lenders, these private bankers often hope that they end up with the property. Competition has reduced the interest rates and onerous terms demanded; but it can still be hard paying back these high interest rate loans.

Little known but very important

Many tax delinquent properties are free and clear; there is no mortgage debt collateralized against the property. Even more surprising, a high percentage of tax delinquent properties do not have other types of liens placed against them. These are some of the least known but very important pieces of information.

One might think that if the taxes are not being paid, that the property owner would not be paying all their other bills. This is not so in a high percentage of cases. I do not pretend to understand why a property owner will not refinance the property and instead allow it to go to tax auction, but it happens a great deal.

Tax sales are well attended

Prior to the run up in prices, tax sales were sparsely attended. While most tax delinquent properties are vacant lots, you could depend on getting improved properties and sometimes larger vacant parcels.

These days, the tax sales are well attended. Inexperienced investors are populating the tax sales trying to get a deal because the prices of property are so high. Unfortunately, they will bid on anything, sight unseen, without any investigation.

Often, the bid will be 80% or higher of the current fair market value. That is no deal.Real estate investors cannot make a safe profit when paying such high prices, especially in a declining market.

Real estate investing gurus are still maintaining that at tax sales, investors can get properties for pennies on the dollar. This is typically no longer the case, however, they still need to sell books and tapes and boot camps.

There is a better way

As I have maintained consistently, the better way is to contact tax delinquents prior to the tax deed sale. Even though most will try to play hardball, if you speak to enough tax delinquents, you will find those who simply want to get rid of a headache and will work with you. To these folks, the stress of the situation is so overwhelming that they just want out.

Coach Mitch’s “Ridiculously Simple System…” shows how to find these folks and how to speak with them so that you both will benefit. If you are thinking that real estate investing is for you, then give me a call and we will discuss your dreams.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Ta ta-