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.