Category: Tax Sale Articles

Establishing Contact with a Homeowner Prior to a Deed-Grab


Establishing Contact with a Homeowner Prior to a Deed-GrabĀ 

When you write feeler letters to homeowners in property tax delinquency, you need to be able to anticipate the kind of calls you will receive. The way you handle these first phone calls from homeowners can determine the outcome of your deed-grab deals.

Some callers tend to be suspicious about how someone who is not an employee of the county could possess information about their tax sale. Others tend to be uneasy about how you located them at a new address. Usually, mentioning that you get all your information out of Internet searches and the public record is enough to assuage all fears. You simply need to tell them that you are a real estate investor who is in the business of picking up unwanted properties and helping homeowners make a little money.

It’s always a good idea to start out by educating your callers in the tax sale process, and then showing them how you have something to offer them that the default process doesn’t. Here’s a more detailed look at how to prepare yourself for most types of callers.

Owners who want some information to begin

If a homeowner first learns about his home making it to a tax sale through an email or postcard that you send out, he’ll call you himself. It’s usually a good idea to start out by explaining to the caller that he owes massive back taxes on his property, and that the county has a lien that it will shortly sell to a third-party investor.

This explanation helps in several ways. To begin, it gives you a chance to make the third-party investor look like the villain of the whole deal. By contrast, you get to emerge looking the part of the friendly professional trying to help. In many cases, setting up a contrast will result in the homeowner doing everything in his power to make sure that the villainous investor doesn’t get his home. He will want you to have it, instead.

You can also try to learn about how the homeowner came to fall so far behind on his taxes. The information you collect can tell you about his chances of being able to get money together to pay what’s due.

Owners who just want to let the property go

With some owners, it’s clear that they simply don’t have the money needed to redeem their home. These are the owners that you’re looking for. They have no choice but to give up their property. Once they accept this, your job will be to sound surprised, and to wonder out loud if you might get the property instead of the investor, to see if there is anything that you can do with it. You can tell the owner that third-party investors just take the property and walk. There’s nothing the owner gets out of it.

If he were to give it to you, though, you’d be able to pay him a couple hundred for signing the paperwork. It’s important to make sure that you mention that the money is for their time signing paperwork. If you make it sound like it’s for the property, they’ll feel insulted.

The owner who wishes to stay onĀ 

Some homeowners will ask you if you’re willing to buy the property yourself, hang on to it for a few years until they come up with some money, and then sell it back to them. This isn’t likely to be a profitable arrangement. It is even illegal in several states. You need to explain to the owner how you aren’t set up to finance homes. You can, instead, ask them to consider how if they don’t come up with the money, they might let you take over the deed.

Get all the information you can

Every homeowner that you call, you need to be sure to get a few pieces of information. You need their contact number, information about the general state that the property is in, about any judgments, liens or mortgages that the property may be subject to and about whether there are multiple owners to deal with.

There’s much more that you need to keep in mind when you speak to homeowners for the first time. The ideas here, though, should be a good start.

Property Tax Sale – Free Lists Online

Property Tax Sale / Delinquent Property Files Often Found Online – Free!

Property tax sale lists used to be a bit of a pain to get a hold of – you either had to make a public records request and wait for that to be fulfilled, or purchase a property tax sale list from a vendor online.

But now that more and more counties are “going online”, you can often find and download these lists for free.

Why the County’s Property Tax Sale Lists Are Better

Not only are the lists that you can get right from the county usually free, but they have a number of other advantages:

1. The lists are often updated very often, even daily, to reflect properties that have dropped off the list.
2. The lists contain not only property tax sale records, but even properties that are slightly to moderately delinquent but not on a property tax sale list yet.
3. They are in electronic format – easy sorting and filtering using your computer instead of dealing with a paper property tax sale list.

How to Locate Property Tax Sale and Delinquent Lists Online

You’ll have the best luck in the midsized to large counties, as smaller counties don’t seem to have the budget to have good online resources.

All you need to do is start Googling! Use words like “delinquent tax file”, “download delinquent list”, “delinquent property file”, “delinquent tax roll download”, and other terms like that.

Let’s see what happens when we do a search for a property tax sale / delinquent list using the term “download delinquent list”:

Property tax sale search on Google

Results for a propety tax sale / delinquent list search on Google

It looks like each of the first few listings has its own property tax sale list or even complete delinquent roll file for download. Let’s look at the first one:

Property tax sale listing online for a tax lien sale

An online list for a tax lien sale

Now, this list is from the last tax lien sale. So that’s an OK start. But look a bit further down in the results – Milwaukee has posted its entire delinquent file online! Over 25,000 records for you to download, each representing a delinquent parcel on its way to a property tax sale soon.

The list contains everything you’ll need to begin marketing to tax-delinquent owners BEFORE the actual property tax sale list even becomes officially available.

Over the Counter Tax Sales

At nearly all tax sales, there are parcels that do not sell for even the minimum amount of taxes owed.

An interesting thing to note about this phenomenon is that it indicates overassessment of a property to an almost unbelievable degree. The property is being taxed in excess of its true market value over the course of just one or several installments of taxes! This is shown by the fact that nobody is even willing to pay the current taxes owed for the property.

Of course, delays in holding tax sales can result in more installments building up than intended by law, before a sale is held. See my article, “Tax Sales – Essential for Every Community”, for more information on this effect.

Tax Sales - Leftovers

In most states, counties re-offer the properties that do not sell at second-chance tax sales. Let’s look at a few ways we might be able to get involved.

Opportunities at “Second-Chance” Tax Sales

If a county re-auctions properties that did not sell at the original sale, but doesn’t give special terms, bargains will still be elusive.

Even if the bidding starts at 1 cent for leftover parcels, competitive bidding will usually eliminate any opportunity to get a property for less than market value.

However, since the properties offered at these tax sales are more “bottom of the barrel”, these tax sales may attract fewer bidders and bargains may be had.

Other times, counties will sell the properties “over the counter”. It’s possible to make small profits on these properties occasionally. In general though, even minor bargains that are openly available to the public for any significant amount of time will be snapped up.

“Second chance” sales in tax lien states, however, can be one of the rare opportunities to participate directly in tax sales, enjoy low prices, AND eliminate negatives associated with tax liens.

This is because the county can “sweeten the deal” in more ways than one in the second chance tax sale.

Indiana Commissioner’s Sales

One example is an Indiana commissioner’s sale. Commissioners can drastically cut the minimum bid for properties offered in the sale, especially after multiple failed attempts to obtain what is actually owed in previous sales. In addition to this benefit, redemption periods for owners are also cut to a very attractive 120 days. Return on investment remains at 10% flat amount for the 120 days (30%+ APR!)

Because county officials in many Indiana counties seem unable to perform reassessments in a timely manner, delays in the tax sale happen often as mentioned above. So, in a typical example, taxes on a servicable single family home in Gary, Indiana can reach almost $10,000 from one sale to the next.

The market value of a home like this is around $10,000, and redemption rates are not as high as the rest of the county, so few bidders will participate in the sale of a home like this.

However, the county may cut the minimum bid of a properties like this to $2000 or less, and just as importantly, reduce the redemption period down to 120 days. Because of the volume of properties offered, and the fact that this is not a deed sale, bidding remains subdued in many cases, and bargains can be had.

In a recent sale I was able to acquire 4 homes, 2 of which were rented Section 8, at $450 apiece, for a total of less than $10,000. The two vacant homes required less than $10,000 total to fix up and are now rented at $450 and $600 apeice, for a yearly gross rent of $23,400. At first, the deal sounds unbelievably good with a less than 12 month payback on investment. I was indeed happy with the investment but it’s not nearly as great as it seems.

Work Second Chance Property as a DeedGrabber?
In my experience, it only pays to be involved in second chance sales as a bidder. Typically, if the owner of a “second chance” property wants to redeem (HINT: this is you if you buy it from the current owner), the full amount of taxes must be paid. In the example above, you would have to pay $10,000+ to redeem the property that you observed sell for $2000 at the second-chance sale.

Tax Sales Increasingly Outsourced to Private Companies

Private Companies Taking Over Tax Sales

Responsibity for Tax Sales Now Often Contracted Out

More counties are outsourcing their tax sales to private companies. This has some definite implications for us as investors.

Whereas government often doesn’t have an incentive to create efficiencies, private companies do. As a result we’re seeing greatly enhanced information access almost immediately when a private company is brought in to do tax sales.

This USUALLY makes it easier for us to obtain the information we’re looking for about upcoming tax sales. An exception can be when the private company collects information and hides behind their private status to deny public record requests.

For the most part, this has not proven to be an issue.

Improvements To Tax Sales By Private Companies in Indiana

For years, many Indiana tax sales have been run by a company called SRI out of Indianapolis. SRI developed the proproetary software that tracks the status of properties offered or sold at county tax sales in Indiana. They also hold the actual auction itself onsite in each county.

SRI has also conducted online tax sales (usually second-chance commissioner’s sales) and developed an ebay-like auction system for those sales. It’s quite good, complete with proxy bidding. This allows you to set a maximum bid you’ll pay, but only pay slightly above the second-highest bidder.

Finally, SRI’s website gives stats for completed tax sales and allows for download of upcoming sale lists.

The stats are very useful for determining which counties had significant activity the year before and are therefore prime targets for pre-redemption period purchases.

Another company, Government Utilities Technology Service (G.U.T.S.), has entered the scene of late, and appears to be developing excellent online resources as well.

Significantly, they have been awarded the contract for Marion County tax sales (Indianapolis). This is the county with the highest tax sale activity in the state.

G.U.T.S even posts the bidder lists from tax sales on their website. Amazing the access that is granted to tax sales when there is no conflict of interest, as with the county.

Tax Sales: Blunders and Other Concerns with Private Companies

You may want to take note when a brand-new private company is awarded a contract to perform a sale in your target area.

Onyx, a Valparaiso company hired by Lake County, Indiana to perform tax sale work in 2010, failed to cause the appropriate notices to be filed in local papers as required by law. As a result, the tax sale conducted they conducted had to be totally reversed as a result.

Millions of dollars had to be refunded to tax lien investors, and all of their efforts to participate in the sale were wasted. I wrote about that in a previous post.

Another concern with private companies is that they will become the sole custodians of what should normally be public information (tax sale results). They could then potentially share this data only directly with the counties. This could make our job of obtaining records of tax sales more difficult.


Finally, when private contractors are paid by the parcel to run a sale or earn a commission, the fees borne by the county can be quite high. A relatively small county in Indiana, Boone County, recently paid G.U.T.S. $70 per parcel for a total of $16,030 to conduct their tax sale.

This seems to indicate that 229 properties were offered at the sale.

Responsibilities of private companies usually include providing initial notice by certified mail for each owner involved in the sale, arranging for publication of notice as required by law, conducting the actual sale, and providing software necessary to track status of the properties in the sale.

For smaller sales where several hundred properties are offered, these rates seem somewhat within reason. But larger counties would pay up to $770,000 or more for tax sales to be conducted privately. Lake County, Indiana for example has recently had tax sales where more than 11,000 properties were offered.

SRI was recently awarded a contract to perform a tax sale in Lake County in which a 10% commission on all proceeds were paid over to SRI. The amount of taxes being offered? $48 million!

Do you think you could remember to place the required newspaper ads if you were awarded a contract for $770,000 or a share of $48 million?

You’ll learn several ways to profit from tax sales in my Underground Tax Sales Secrets report, which you can get below for free.

Government Tax Sales – Profit Without Cash

Government Tax Sales – The Hidden Bargains

There are actually several different ways to profit from government tax sales. You can avoid attending auctions, bidding against others for properties, or waiting for tax liens to mature completely. More in a second.

In order to obtain properties directly from government tax sales, you will need to do a significant amount of research on the properties being offered. Then you’ll attend a sale where you will need to pay all cash for properties that you generally cannot inspect.

In addition, you may have to bid much more than the minimum advertised price to actually get the property. For tax liens, you’ll wait many months or years to have a chance to acquire the property.

Let’s look at some ways you can profit now, without attending government tax sales, investing cash, or waiting.Government Tax Sales and Immediate Profits

The first opportunity is to get out in front of actual government tax sales by requesting a listing of all tax-delinquent properties in the county you want to work.

These tax-delinquent listings can be anywhere from 1 day delinquent to several years delinquent. Either way, the properties have not been offered at a tax sale yet.

Start with the properties that have been delinquent the longest, and also those with owners who live out of the area. These properties are prime candidates for a bargain purchase.

Many times, and out-of-area owner who is delinquent may not even know about the delinquency because they have basically forgotten about the property. The property may be run-down or may be occupied by family members who are not paying the owner.

You can get properties like this under contract and resold to an investor before the government tax sale occurs. And walk away with a nice profit with no risk.

Or you can sometimes buy these properties outright for a very small token payment to the owner. Then quickly resell before a sale on the property occurs.

This way you’re using some of the purchaser’s money to redeem the taxes, and then the rest is yours.

Getting Started with Government Tax Sales

Watch for government tax sales to be announced, and acquire the list of properties about to be auctioned. These owners will lose the property in a matter of months or even weeks.

A sense of urgency is now created to do something with the property. One technique is to “partner up” with these owners.

This can mean either redeeming the property and reselling it some time later, or reselling it immediately to an investor. You can even arrange to split the proceeds with the owner instead of paying them anything upfront.

This way the owner gets something for the property and you profit with minimal investment.

You can even profit from government tax sales in many areas even after the sale takes place and the property is lost to an investor.

This is because many areas have a bidding method for properties, where the county can take in more money on the sale of the property than what was owed. For example, a county may auction a property for the amount owed, $5,000, and receive $25,000 for the property at the sale.

The extra $20,000 that is collected above and beyond what’s owed is usually due to the former property owner. You can look up the results of past government tax sales and see which properties generated surplus funds like these.

Then, you can negotiate with the owner to receive a finder’s fee for money the owner didn’t even realize was theirs! For full details, see our course, “Hooked on Overages”, available here.

These are just a few of the “side opportunities” that government tax sales can offer, without risking money at the actual sale, bidding, or waiting.

In fact, as I showed you in the finder’s fee example, we can even use the competitive bidding aspect of some government tax sales to our advantage by helping owners recover funds due to them.

Discover these, and other insider techniques you can use at government tax sales, in my “Underground Tax Sale Secrets”, available below.