Illinois Tax Lien Sales: Who bids on tax liens at 0%? (R.A.M.S.)

[Daniel Legut]

At the Tax sales where R.A.M.S. is used in Illinois for the sale of tax liens, who bids 0%? Why do they do it? Is it mostly banks that do it to protect their assets? I'm interested to hear from anyone who bids 0% or anyone who has attended Illinois Tax Lien sales in counties that get low average winning bids. These counties include: Dupage, Grundy, Lake, Mchenry, Mclean, Sangamon, or Will. These counties stick out as especially low average bids. Why is that the case? Are tax liens here more desirable?

[Ned Carey]

@Daniel Legut The number I hear nationally is about 4% do not redeem. Keep in mind that includes a lot of worthless or odd properties.  In Baltimore city I believe the number is about 8-10% but that certainly includes a lot of vacant and high risk properties. 

Believe it or not sometimes the bidding is just due to stupidity. The stupidity is not limited to smaller players either. In MD we see a regular pattern of big bidders coming in thinking they are smarter than anyone else. Then after about three years they realize they are not making money due to Maryland's quirky bidding system.

One reason to bid zero is; in some states that allows you to buy the next lien on that property at the full rate. So the zero bidders are counting on someone taking a long time to redeem so they can bump their returns with future liens.