Tax lien zero bids in IL

[Brandon Bruckman]

New to tax liens. I’m doing research in IL. I watched the Boone county auction and reviewed the results. I couldn’t figure out why many lots went for zero bid. My first guess was it’s likely they get the house but I thought most liens were paid off before foreclosure.

Anyone understand why there are so many zero bid liens?

Thank you!

[Chad U.]

Originally posted by @Ned Carey:

@Brandon Bruckman there could be several reasons depending on state law. In MD many attorneys bid the interest rate way down because their goal is to earn the legal fees. This puts non attorneys like me at a severe disadvantage.

Some states allow you to pay the new taxes and receive the full interest rate if you own the lien. So by earning the full interest on the new taxes they dollar cost average and get a higher rate. The longer before the lien redeems the better this works out. 

Interesting point Ned I was not aware of that. 

Also, many of these investors are funds and buy these in bulk, gambling on the chance (say 1 in 5, as example but not sure what the exact odds are) that it will go to a tax deed sale and they eventually take ownership of the property.  If the property does not revert back to them, they can still recoup all their costs including legal fees in the tax deed foreclosure sale.