Tax Lien Certificate Sale – How to Research the Properties – Visiting the Collector’s Office

Buying tax lien certificates can be an interesting way to earn a higher percentage return on your money than you would at the bank. In our county for instance, you could earn 10%. In Tax Lien Certificates – Sure Thing or Risky Investment – I described what tax tax lien certificates are and how you can earn money on them. In Tax Lien Sale – Research Time – I described how I was going about researching the properties that would have tax lien certificates sold on them in my county this year.

Today, I will describe additional research I have done on the sale and properties in it.  If you are interested in tax lien investing, this might help you understand some of what is involved.

Research Already Done
As you may recall from my last post on tax lien certificates, I already obtained a list of the properties for which lien certificates would be sold and had begun to research them in the Geographic Information System Database (GIS). While the GIS data told me a lot, it did not have any information about liens or special assessments.

What Other Research Is Needed?
Although county tax liens take precedence over most liens, state or federal tax liens are supreme (at least in our county)! Also, although a tax lien certificate holder would get their money before the mortgage company in our county, the mortgage is not extinguished by a tax sale – so it might be better to try to find one without a mortgage (or at least one without 2 or 3 mortgages!).

I would like to know if the property is in foreclosure as well, but would probably need to subscribe to Realtytrac or some other listing.   I won’t necessarily be able to determine foreclosures from county records.

In order to search for public records on the properties, I visited our county offices. Our county offices are in a complex, so the Collector’s, Assessor’s and Recorder’s offices are all in the same building.

My Visit to the County Collector’s Office
County ComplexAs I walked through the door, I was greeted by a receptionist who steered me first to the Collectors office. The Collector’s office is responsible for collecting taxes.  There I picked up a current printed list of the properties for which tax lien certificates would be sold on Monday. This list was different that the one I had obtained online in that it had properties removed from it – if the owner paid the taxes after the first list was printed.

I also got to chat with Ruth, one of the Collector’s office personnel who helps to run the tax lien sale auction.

Information About the Actual Sale
Ruth was very friendly and helpful and I learned the following in my conversation:

  • Although the sale starts at 10:00 AM, they start registering folks at 9:30 AM and a lot of people show up about 15 minutes before that.
  • To register, you sign an affidavit saying that you don’t owe taxes and give the name and address you would want on any collectors deed that might be issued as a result of your purchase of a tax lien certificate. (Remember that my county issues a collectors deed if the owner does not pay the back taxes with the year after the tax lien certificate is sold.)
  • Many different kinds of people come to the sale – from experienced investors to people next door to property being included.
  • Parking can be tight so come a bit early.
  • The number in attendance varies but has been about 60 – 70.
  • The sale will be held in a room down the hall from her office (see picture below).
  • Some investors start research the year prior (using last years list of properties).
  • Most investors don’t do a title search unless they end up buying a certificate.
  • The percent of delinquent tax payers who pay taxes before the buyer of the certificate gets the ‘collectors deed’ is high. This is a good thing, the investor wants the interest payment, not the property.
  • The county collector (who I saw hard at work in the next office) will run the tax certificate auction.

Ruth offered to let me call her with any followup questions I might have and made sure I had her number!

Auction RoomWhen I left the collectors office I peeked in the room where the sale will be held and snapped this picture of it. Then I headed downstairs to find the Recorders office.  Read all about this in my next post!

Have you ever researched tax liens?  What else did you do?   What kind of research do you do on your regular investments?

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