Tax lien sales are a common way for local governments to collect unpaid property taxes. When a property owner fails to pay their property taxes, the government can place a lien on the property, which serves as a legal claim against the property. The government then has the option to sell this lien to investors in order to collect the unpaid taxes. However, there are two ways in which these tax liens can be sold – through a live sale or through an over the counter sale. In this blog post, we will discuss the differences between these two methods and their pros and cons.
Live Sale:
A live sale, also known as an auction, is a public event where potential bidders gather in person to bid on tax liens. These auctions are typically held at a specific location and time, and interested bidders must physically attend in order to participate. The bidding process can be competitive, with bidders vying for the same liens and driving up the prices. The highest bidder wins the lien and is responsible for paying the delinquent taxes on the property.
Over the Counter Sale:
In an over the counter sale, tax liens are available for purchase directly from the local government. This means that interested investors can simply walk into the tax collector’s office and purchase a lien without going through a competitive bidding process. This method is also known as a “first come, first served” system, where the first person to purchase the lien gets it. The prices for these liens are typically set by the local government and may be at a fixed rate or a percentage of the property’s value.
Pros and Cons:
Live sales have the advantage of being transparent and open to all interested parties. Bidders have the opportunity to physically inspect the property before bidding, which can help them make informed decisions. Additionally, the competitive nature of the bidding process can drive down the prices of the liens, making them more affordable for investors. However, live sales can also be time-consuming and require bidders to travel to the auction location, which may not be feasible for everyone.
On the other hand, over the counter sales offer convenience and ease of access for investors. Bidders can purchase liens at their own pace without having to attend an auction. This method also allows for negotiation of prices with the local government, which can potentially result in better deals for investors. However, the lack of transparency in this process may lead to higher prices for the liens.
Which one is better?
The answer to this question depends on the preferences and goals of the investor. Live sales may be more suitable for those looking for a competitive bidding process and the potential for lower prices, while over the counter sales may be preferred by those who value convenience and negotiation.
It is also important to note that each state and local government may have their own regulations and procedures for tax lien sales. Some may only offer one method while others may have both options available. It is essential for investors to research and understand the specific rules and requirements of the location they are interested in before participating in a tax lien sale.
In conclusion, both tax lien live sales and over the counter sales have their own advantages and disadvantages. It is important for investors to carefully consider their options and do their due diligence before making any purchases. With proper research and understanding, tax lien sales can be a profitable investment opportunity for those interested in delinquent property taxes.