Over-The-Counter Tax Sale Property

 

At first glance, tax sale properties available over-the-counter seem to be a good opportunity.

On the surface it would appear you’d enjoy the following benefits:

  • No competition – walk right in and buy them!
  • Pay just the minimum and don’t bid against others
  • Take your time and choose the one that’s for you

However, there’s no free lunch out there with tax sale properties.

The Problem with Over-The-Counter Properties

The main problem with buying properties over-the-counter, is that the vast majority of them are worthless.

The only reason these properties are now available anytime, for just the minimum, is that they’ve been offered at one or several past tax sales – and have received no bid.  Nobody was willing to bid even the amount of taxes owed.

You’ll also have to deal with some of the usual tax sale property negatives as well, such as possibly having to do noticing, and/or a quiet title action to get marketable title to the property.

You almost certainly WILL NOT find serviceable (“rehabbable”) rental houses on the over-the-counter list because these would have been purchased at the previous sale.

Exceptions

One way that serviceable houses could appear on the over-the-counter list (probably only the first couple days it comes out) is if the county sharply reduces the minimum bid for the properties when they appear on the list.

This makes sense to do – because even though the county incurs a “loss”, the property may now return to the tax rolls if someone wants to buy it.

A property that may have drawn no bids at $20,000 minimum bid could very well draw bids at a reduced price of $5,000.  But again, it won’t take much time for the newly-reduced properties to be discovered and purchased.  So if you wander in at a random time, these properties will probably be off the list already.

Specialty Properties

You may also find profitable properties on the list if you deal with non-residential properties.  This, however, requires a knowledge of your local market and area.  The last thing you’ll want to do is purchase a bunch of properties that seem to be a bargain, but which nobody else wants to buy.

Here are some examples of properties that investors have reported they found on the over-the-counter list and resold profitably:

  • Undeveloped lots in subdivisions – These can often be purchased for under $1000 and sold for $2-3000 or more
  • Billboards / Cellular Towers – Because these usually don’t have an “address”, land containing these improvements can be overlooked at the main sale
  • “Nuisance” Properties – These properties have no intrinsic value but may prevent another property owner from utilizing their properties fully.   Therefore, you may be able to sell this type of property to the property owner for a profit.

Examples of nuisance properties include railroad easements, land containing only part of an improvement (like a house), sections of parking lot at a mall, and countless other properties that were accidentally allowed to go through the tax sale process.

Over-The-Counter Sales – Not to be Confused with “Second Chance” Sales

“Second Chance” sales (for lack of a better term) are sales offered by the county after a property doesn’t sell at the first auction.  These CAN be a good opportunity depending on the terms of the sale.  Note that these are not truly over-the-counter because the properties that can be purchased are only available at another auction or for a very short time, not anytime over-the-counter.

As usual, with any tax sale property opportunity, learn the local rules and try to discover the best time to get involved, and best way to get involved.  True opportunities likely exist just below the surface, and not through obvious means.

 

{ 11 comments… read them below or add one }

Clark B. Penzien November 21, 2012 at 3:33 pm

Very interesting article and like what you have stated. Thanks. Northern Michigan Properties…

Reply

Sheila April 5, 2013 at 9:17 pm

I am doing some research on O-T-C sales and you have helped me a lot with this information. My daughter was telling me she wanted to start buying O-T-C homes and I told her that I would do some research first before I thought about loaning her the money to get started. Thank you again.

Reply

michael guilas April 5, 2013 at 4:07 am

Do they offer these over the counter properties in the fifty states?

Reply

admin April 22, 2013 at 3:07 pm

In some form or fashion, most do – but it’s usually the “leftover” stuff. Money can be made from finding the right properties but it typically won’t be houses or any other “bread and butter” property that you’ll find.

Reply

admin April 22, 2013 at 3:08 pm

In some form or fashion, most states do.

IT’s really not the way to go, for most people.

Reply

iris June 8, 2013 at 7:29 pm

hello can i just go to the tax office and pay for the delinq. lien and have first chance on the property if i have a address of a property that has a tax lien and i pay off the delinq. taxs Iam i able to be the lien holder on said property

Reply

admin June 19, 2013 at 2:52 am

No if you do that you will be “donating to the owner”. You have to attend a sale.

Reply

Oscar G August 29, 2013 at 4:40 pm

Question…If it is Tax Lien Certificate State, Would iris not be entitled to a redemption period and interest earned gain, and a chance to foreclose on the property ? Please explain how she would be donating to the owner.

Reply

admin October 28, 2013 at 8:55 pm

You have to buy the property at an actual sale, you cannot just go and pay the taxes for someone who is delinquent.

If you just pay a delinquent account, you are giving the owner a gift as you have no interest in the property.

You must buy at an actual sale.

Reply

MAX February 3, 2014 at 2:35 am

HOW THE SYSTEM WORKS?

Reply

admin February 8, 2014 at 1:50 pm

Let me explain the whole entire thing for you right here!

Oops, not quite enough room

Reply

Leave a Comment