dr dank, most of what you said I have read elsewhere but:
Originally posted by "drdank":
......In a lien state you are purchasing the lien only from the county. The lein is worth the amount of taxes due by the owner. The owner then has a set period to pay you back for the lein. On top of the initial amount of the taxes the past due property owner would also have to pay you a percentage. Depending upon the state you are in the percentage will be different. If the property owner doesn't pay the lein holder (you) back within the given time then the physical property goes up for aution. You may attend the auction and bid on the proprty but you do not have any priority over other bidders. When whoever wins the auction pays the county your are reinburced for your lien....... .
this doenst make any sence... what about foreclosure then? I thought that if you bought the lien then if they didnt pay it you could foreclose
Originally posted by "drdank":
..........There are also variations of bidding structure from state to state. Some states you are bidding on the actual price you will paythem for the lein, in other states you are bidding on the percent return you are getting on the lien. In the case of bidding on the percent you are starting out at the maximum percent they will give and "Bidding Down" the percent. This is where the premium comes in. For instance say a properties premium is $3000 and the percent you are bidding starts at 30% you would comete with the other bidders by decreasing your percent. Once the lowest percent has won the winner will then pay the premium and will be issued a lein worth the premium + the % of the premium..... .
this doesnt make any sence from what I have read. especilly when combined with what you said above about the property going to auction if the lien isnt paid. why would someone bid down the % if they arent going to get anything. seems like a waste of time. but if someone bid down the % to 0, and then could foreclose on the property, that would make sence.
But the state I have been looking at I dont think they do the % bid.
Originally posted by "drdank":
.........You should always check with your local government for the most accurate information concerning lien auction. You can typically find the county tax assessor's website online. That would be a good place to start looking....
thats what I have been doing, but some of what they siad doesnt make sence, or just doesnt seem complete. Thats why I am asking.
Originally posted by "drdank":
...Also do not expect to pick up a $500,000 home for $1000, there will be many other people at the auction and will drive the prices up.
I am not, I know it will probably go up (and if it doesnt whats wrong with it?). its just werid that it would even start at that.....
but anyway, this is what I really really dont understand:
**IN THIS EXAMPLE, BIDDING WILL START AT THE SALE AMOUNT--$1,000.
IF THE WINNING BID FALLS BETWEEN $1,000 AND $40,000, THE ONLY AMOUNT PAID THE DAY AFTER THE TAX SALE IS THE SALE AMOUNT--$1,000.
**IN THIS EXAMPLE, ANY BIDS IN EXCESS OF $40,000 WILL BE SUBJECT TO A BID PREMIUM—20% OF THE AMOUNT IN EXCESS OF THE $40,000 (40% OF FULL CASH VALUE AMOUNT).
BID PREMIUM EXAMPLE
**FOR THE EXAMPLE USED ABOVE, WE WILL SHOW A BID PREMIUM CALCULATION FOR A BID OF $50,000.
BID $50,000 (50% Bid Factor X $100,000 Full Cash Value)
40% OF FULL CASH VALUE $40,000
AMOUNT IN EXCESS OF
40% OF FULL CASH VALUE
HIGH BID PREMIUM $10,000
X .20
BID PREMIUM DUE $ 2,000
SALE AMOUNT $ 1,000
TOTAL AMOUNT DUE
DAY AFTER TAX SALE $ 3,000
INTEREST EARNED BY INVESTORS
18% ON SALE AMOUNTS
0% ON HIGH BID PREMIUM
I understand from this that you wouldnt want to bid more of a premium then you would get back from intrest on the sale amount unless you could get the property.
