All Forum Posts by: Ron Burmeister

@Bryan Aylward

You may want to try an FHA 203K loan. Stefanie Adams with Option Financial can help you with that. Option Financial is also located in Cincinnati and Ft. Mitchell.

http://www.optionfinancial.com/default.aspx

Samuel,

Prior to the commissioner sale a property is considered to be "going through the foreclosure process" and may be marketed and sold by the owners in any manner they wish. They just have to satisfy all liens when they do sell it i.e. short sale, payoff the liens etc.

After the commissioner sale the property now has been "foreclosed".  The buyer of the property may then sell the property any way they wish i.e. auction, realtor, fsbo etc. 

Some auctions sited such as Auction.com and Xome.com are placing properties on their sites that are scheduled for the commissions sale.  I have not seen where one can buy these homes on the sites. It appears to just be a marketing scheme for the sites.

Hope this helps.

Crystal,

Welcome to BP!   You will find a tremendous amount of information here, especially in the podcast.  Good luck!

Kevin,

Welcome to BP! There is an enormous amount of information here.  I know that I have learned a lot from this site.  I am an investor and real estate agent in Florence.  I would love to have coffee with you and share what I have learned over the past couple years.   Send me a message and let's link up.

@Autumn Alexander

One thing to remember about tax liens is "Every State Is Different". Be careful when someone gives you advice and they are not speaking specifically about Kentucky.

Kentucky has very specific rules concerning third party purchases of tax liens.  You can read all about it here Kentucky Department of Revenue

Disclaimer: I am not an attorney or tax professional.  I am not offering legal or tax advice just my own opinion. Get a good attorney and CPA, you will need them.

Kentucky tax liens sales are not an auction they are a lottery. Liens are sold for the amount owned, period.  The sale is handled by the county clerk.  How a County Clerk runs the sale can very depending on the clerks interpretation of the law and their level of technology.

The tax lien sales begin in late July and run through September or so. Each county schedules a different day so that buyers can attend all the sales if they want.

I followed the Boone County sale this past year and here is how it went:

You register as a purchaser with the State and/or County Clerk depending on how many liens you are going to buy.  Prior to the sale you email the county clerk a list of liens you want to buy and in the order you want to purchase them.  Day of sale you sign in, tell them how many liens you want to buy and how much you want to spend, if limited.  They put your name in a hat and when everyone present has registered the clerk draws names from the hat and this is the order of the lottery.  The sale was over. 15 minutes, tops.

They then take the order the names were drawn and load this in their computer system along with the spread sheet you provided. The computer then determines which lien you get and they notify you later that day.  Once the clerk records the lien, you then own the lien not the property.

There were 29 bidders at this sale and there were about 150 liens.  They awarded 1 lien at a time i.e. the first bidder got their first choice, second bidder got their first or second etc.  Depending on the number of liens the county clerk can adjust the number of awards at a time.

You recoup your money by the homeowner paying you the taxes and fees due or you foreclose.

There are very specific rules on what you can do with the lien.  You cannot foreclose on the property for 1 year after the lien was delinquent (Which is January 1 of the following year). The lien is valid for 11 years from purchase. There are very specific recording and notification requirements that must be met. You can charge 12% interest on the balance of the lien only.  You can collect certain fees and legal expenses, however, you cannot charge interest on the fees and legal expenses. The legal expenses collected are actual fees and you may have to justify them. I have heard that on average, by floating the legal expenses your yield can be reduced to about 9%.

If you foreclose, the property will be sold by the master commissioner to the highest bidder and you are paid from the proceeds of the sale.  You can even bid on the property if you want.  The good thing about Kentucky tax liens is they take first position even ahead of a 1st mortgage.  I  have heard that the only thing that a tax lien is subordinate to is an IRS lien.

So whether the property has a mortgage or not is really negligible except for some strategies. One strategy is; If they are not paying their taxes they probably are not going to pay their mortgage. So, buy a property with a mortgage and sit back and wait for the bank to go through the expense of foreclosure. Just don't let your taxes and fees exceed some percentage of what the property may sell for at the master commissioner's sale.

Tax liens that are not sold during the lottery sale can be purchased from the county clerk the day after the sale.  All the rules of registration and how you handle the liens are still valid regardless of how you purchase them.

The tax lien you mentioned of $4800 on a $600,000 property is very do able. If it is currently delinquent you should be able to purchase it from the county clerk now. But remember, you will only own the lien not the property.

Hope this helps and good luck.

Just wanting to warn everyone about possible issues with using the provided title services associated with a Hubzu auction property.

This is what happened to me on a recent transaction on a fix and flip property that I bought in Northern Kentucky just outside Cincinnati.

Hubzu’s contract states, basically, that if the buyer uses their designated title agency (Premium Title / Altisource) for title work and closing then the seller will pay the closing fees and owners title policy. This could save the buyer around $800 to $1200 depending on the purchase price. Kind of enticing and that is what I did in a recent transaction.

The issues began at closing:

The closing agent was a notary with very little knowledge of the paper work required. Basically it is Sign-Here-What-Is- It-I-Have-No-Idea type of situation. The closing agent noticed that the seller’s attorney-in-fact had signed the deed where I, the buyer, should sign. This caused a 2 hour delay in closing while we waited for the new deed.

80 days later - I now have a contract to purchase and will close in a couple weeks. I happen to check to ensure the deed has been recorded and to my amazement it was not. I immediately sent an email to Altisource notifying them of the issue. They replied and said they were assigning a complaint with someone at Premium Title, the closing agency.

A week went by without hearing a word from Premium. There is only an 800 number for Premium which connects you with their call center in India. After going through their voice prompt system I finally was able to establish communication with someone.  All they do is act as a go between with the people that do the work at Premium Title in Atlanta. You can never speak with a person that knows and understands the issue.  After many days, phone calls and emails they finally send the deed for recording.

In the mean time I get a call from my buyer’s title company informing me that there is a mortgage against the property that has not been released and that we cannot close unless this is cleared. Here we go again, back to the phone. As stated, you are dealing with a call center in India. They do not know the difference between a deed and a release of mortgage. They promise that the matter is being taken care but there is a back log in the recording department.

A back log? They sent me a copy of the release of mortgage which was dated March 2015! They have had the document from March and now it is September and it is not recorded! And to top this off they allowed me to close with the open mortgage!

Again, no sense of urgency on their part. I begin demanding contact information for someone in the recording department. They cannot give that out. I demand to speak with their manager, “He is out of the office”, “what about their manager?”, “We will have him call you”, never happened.

Remember the complaint that Altisource filed? They finally send me an email wanting to help. I call and get a call center representative in India again and he is clueless about the situation. After multiple phone calls, emails and broken promises of returned calls I finally get an email notice, with a tracking number, that the release of mortgage has been sent for recording.

The after days of waiting and checking, the release is never recorded. I call the court house to find out what is going on. They only know that they do not have it. If it was not recordable then they just put it in an envelope and snail mail it back to the sender. Later find out that Premium Title did not send the proper fee.

Here we go again, back to India. No one can give me an answer to what is going on or allow me to speak with anyone in the department that understands the situation. After days of intense phone calls they finally give me an email and phone numbers for a Vice President and 2 managers at Premium Title in Atlanta. I left voice mails with all and no returned calls. Even though one of the voice mails promises a return call in 2 business hours.

After numerous voice mails and emails I finally get an email response from one of them and all they say is that they are looking into it. Days of waiting, emails, unanswered voice mails and calls to India I finally get an email that states they have a new release and will be sending it for recording.

It was finally recorded and we closed.

Bottom line: It is enticing to save a couple hundred dollars, but you have no representation on title issues.When all goes well, as a previous transaction did, there is no problem. But when there is a problem you are not their customer and they have very tall walls that you cannot get through.

What did I learn: Until the deed is recorded there is nothing that prevents someone from recording a lien on the property against the previous owner and your owner's title policy may not (probably will not) cover it.

I will use my own title company in the future.

Stephen, welcome to BP! I am located in Florence Ky and would be happy to help. Send me a PM and let's get together.

Raymond, Welcome to BP! I am a real estate agent in Northern Kentucky and can help you with what you are looking for. Send me a pm and let's have coffee.

Adam, welcome to BP. I am just across the river in Northern Kentucky. Let me know if you ever need anything.

From your original post it sounds like you mailed a letter to the owner and then you received a call from the other agent. This indicates that the seller may be in contact with the other agent. It also sounds like the agent showed you the house. This also indicates a relationship with the owner. If so, then I would submit the offer to the agent and put a 24 hour response time in. The agent either has a relationship with the seller or not. Also, working through another agent helps you from ending up in an undisclosed dual agent situation. Hope this helps.