Tax Lien Certificate Auction Sale – Who Are These Bidders?

This post is part of my continuing saga describing the tax lien certificate sale in my county. In my last post Tax Lien Sale Day, I shared observations on how the sale was run and on the participants in the sale.

Read on to learn more about the individual bids and bidders!  Keep in mind that I am not an experienced tax lien investor – I’m just relaying my own experiences with this one sale.  Don’t invest in tax lien certificates on my say so!

The Major Player
As I mentioned in my last post, there was one guy (the #12 bidder) – in his early 40s – who was a major player, bidding on almost all of the properties. He had two supporting people with him – to feed him information on how much to bid and he ended up spending over $125,000 in bids.

This very persistent and somewhat irritating (to the other bidders) guy turned out to be someone who had a company dealing with real estate. They come to this auction each year and buy a lot. He said that from all the buys he did last year, he only got about 5% of the properties – on the rest the owners ended up paying taxes and redeeming their property. He also indicated that tax lien certificate buying was a hobby for him (but he let it slip that he had been buying them for 10 years!).

One of the men with #12 spoke with me for awhile, doing his best to describe tax lien investing as a really bad deal for the private investor (trying to reduce next years competition I assume!). Although this group claimed to be individual investors, the real estate flipper thought they might just be saying that because they were an out of town company and the rules of the county only let private investors attend.

Very few bidders stayed in the game with the men and woman bidding as #12 so they got a lot (16) of the property lien certificates.

The 92 Year Old Bidder
One of the bidders that did hold fast in bidding against them was the 92 year old woman. She was very interested in property with acreage and beat #12 out for several of them. She was the second highest spender at bid amounts around $47,800 (total taxes,et al were $3724, 1097 and $268). For that she got liens on three properties – one 160 acres, another 8 acres and a third of about 49 acres.

First Time Bidders
The two mom’s with toddlers both won one property tax lien certificate each. I heard later that one of them wanted the vacant lot she bid on to build a house.

The couple I had spoken to earlier (they were first time tax lien sale goers too), had come specifically to buy the lien on a strip of land that butted up against their current 5 acres.

Another couple who were first time tax lien sale goers bought a lien for a strip of land they researched which had a cell tower and a big billboard on it. They had concluded from their research that the owner listed was deceased and thought they might be able to get the income from the lease of the land if they owned it.

The Bidders Surprised Me
Analyzing the bidders was fun and surprising. It reminded me of the time I ran in the corporate challenge. I looked around at the competition and thought – they don’t look any different than me – I bet I can beat them. Then those older ladies went on to whip my pants off in the race! These bidders seemed like everyday ordinary folks, but heh, they invested in tax lien certificates and I didn’t!

Why I Didn’t Bid
You may be wondering why, after all the time and effort I put into researching and writing about tax lien certificate sales, I didn’t buy any.  Here are my excuses:

• I’m not a first adapter – this is a new type of investment for me and I am not yet comfortable with owning tax lien certificates.
• I want to learn more about potential risks – If a property owner ends up not paying their taxes on the property for which I hold  a certificate, there is the possibility that I will have to spend money – to quiet title,  to evict the owner, fix up the property or sell it.
• I want more time to research properties – although I did quite a bit of research this year, I didn’t finish with the whole list and didn’t actually see many of the properties.
• I needed to see the auction to get comfortable with the process – I haven’t been to many auctions at all, let alone tax lien certificate auctions.

Have you ever been surprised by ordinary seeming folks doing something you thought extraordinary?