Real Estate Journal Online

In Marion County, Indiana, tax lien sales are used to help the county government recoup losses when property owners fail to pay their taxes. Unfortunately, the system is “backing up” as unsold, delinquent properties pile up debt and fail to move at the auctions[1]. For example, one structurally unsound, vacant motel property has outstanding taxes in the sum of $70,000. Not surprisingly, it did not sell at the last auction and now must wait until a tax surplus sale in order to have its debt cleared and be offered at a more “reasonable” price. Furthermore, if the properties appraise high enough, then the city-county council in the area may opt to refuse to approve a tax title deed, which erases back taxes and liens before the auction so that buyers can bid directly on the property. Of the 3500 properties currently in the surplus pool, probably only 200 or so will be included in the tax surplus sale.

Many tax lien investors like surplus sales because they can get steep discounts on properties and buy the deeds directly rather than buying tax liens and then waiting months or years to redeem the liens or foreclose on the properties. However, the value of these properties is likely to fluctuate far more, making these purchases higher risk in some cases since they may be damaged or otherwise “handicapped.” Do you personally like tax surplus sales?

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[1] http://blogs.indystar.com/starwatch/2011/03/18/3500-properties-waiting-for-tax-surplus-sale/