MArket data Analysis: Tax deed activity
Florida
In Florida, the number of properties sold at tax deed auctions typically corresponds to the tax lien certificates sold two years prior, due to the state's minimum redemption period.
Over the past decade, these numbers steadily declined until 2020, when COVID-19 disruptions caused a disconnect. An uptick in 2021 was mainly due to catching up from the 2020 disruptions, and by 2022 the declining trend continued as expected. However, 2023 saw an increase in tax deeds, aligning with the rising trend of tax lien certificates sold in recent years. This trend suggests potential increases in 2024 and 2025. |
Michigan
The past five years in Michigan have been unusual. The quantity of tax deeds remained steady until a sharp decline in 2020 due to COVID-19 disruptions. The numbers rebounded in 2021 and have been increasing steadily. Notably, the dollar value of properties sold dropped significantly from 2022 to 2023, likely due to improving economies in Detroit and surrounding areas.
Historically, counties with excess blighted properties chose higher value properties to sell, but a combination of less inventory and lower value properties has led to a decline in dollar value. The trend of increasing quantities of properties going to tax sales is expected to continue. |
To access more detailed data, visit Tax Sale Resources.
Hot Topic: Understanding Property Tax Foreclosures, Judicial vs. Administrative
Navigating the world of property tax foreclosures can be intricate, especially for tax deed investors. One of the key distinctions to grasp is the difference between judicial and administrative (or non-judicial) foreclosures. Both processes aim to resolve unpaid property taxes, but they operate differently, and the details vary greatly depending on the state*. Here we break down the essentials, helping you make informed investment decisions.
What is Property Tax Foreclosure?
When a property owner fails to pay their property taxes, the government may initiate a foreclosure process to recover unpaid taxes. For tax deed investors, this process can open opportunities to acquire properties at potentially undervalued prices.
*For additional reference, take a look at this article from R.E. Tipster that provides a comprehensive list of the Judicial and Non-Judicial states in the US: https://retipster.com/judicial-non-judicial-foreclosure-states-list-map/.
Key Differences of Each Process
What is Property Tax Foreclosure?
When a property owner fails to pay their property taxes, the government may initiate a foreclosure process to recover unpaid taxes. For tax deed investors, this process can open opportunities to acquire properties at potentially undervalued prices.
*For additional reference, take a look at this article from R.E. Tipster that provides a comprehensive list of the Judicial and Non-Judicial states in the US: https://retipster.com/judicial-non-judicial-foreclosure-states-list-map/.
Key Differences of Each Process
TOPIC |
JUDICIAL |
ADMINISTRATIVE |
Costs |
More expensive, widely variable, with limits of recovery |
Less expensive, costs normally recoverable |
Foreclosure Period |
Widely variable, subject to court docket |
Expedited upon notification |
Incentives |
May not be cost-effective to foreclose on low balance liens |
Foreclosure on more low balance liens |
Title |
May require taking title to the property |
May not require taking title to the property |
Marketable Title |
Quiet title not required |
May require quiet title |
Legal |
Required local legal representation |
No need for legal representation |
Tax Sale |
Service may need to manage sale |
Liquidations conducted by local government or third party |
Comparison table provided during an NTLA Webinar. Visit NTLA Events for more information.
Which is Better for Tax Deed Investors?
Both judicial and administrative/non-judicial foreclosures present unique opportunities and challenges for tax deed investors. Here’s a few things to consider:
Tips for Tax Deed Investors
Conclusion
Understanding the differences between judicial and administrative/non-judicial foreclosures is essential for tax deed investors. Each process has its advantages and drawbacks, and the best choice depends on your investment strategy and risk tolerance. By staying informed and performing thorough due diligence, you can navigate the property tax foreclosure landscape with confidence and maximize your investment opportunities.
Happy investing!
Both judicial and administrative/non-judicial foreclosures present unique opportunities and challenges for tax deed investors. Here’s a few things to consider:
- Judicial Foreclosure:
- Best For: Investors who prioritize legal certainty and transparency.
- Considerations: Be prepared for a potentially longer and more expensive process.
- Administrative Foreclosure:
- Best For: Investors looking for a quicker and cost-effective acquisition.
- Considerations: Ensure due diligence to mitigate risks associated with less oversight.
Tips for Tax Deed Investors
- Research Local Laws: Foreclosure processes vary by state and locality. Understanding the specific laws in your target area is crucial.
- Perform Due Diligence: Investigate the property thoroughly, including any liens or encumbrances that might affect its value.
- Budget for Costs: Factor in all potential costs, including legal fees, repairs, and holding costs.
- Network with Professionals: Building relationships with local real estate attorneys, tax collectors, and other investors can provide valuable insights and support. Consider joining associations like the NTLA to stay informed.
Conclusion
Understanding the differences between judicial and administrative/non-judicial foreclosures is essential for tax deed investors. Each process has its advantages and drawbacks, and the best choice depends on your investment strategy and risk tolerance. By staying informed and performing thorough due diligence, you can navigate the property tax foreclosure landscape with confidence and maximize your investment opportunities.
Happy investing!
Hot Topic: Navigating the World of Tax Lien Certificates and Tax Deeds
Investing in the real estate industry comes with a variety of options. Two such options that have gained significant attention among investors are Tax Lien Certificates and Tax Deeds. We aim to shed light on these two concepts and help tax deed investors make informed decisions.
Understanding Tax Lien Certificates
A Tax Lien Certificate is essentially a claim against a property due to unpaid property taxes. When property taxes become delinquent, the government auctions off a lien certificate to the highest bidder. This certificate gives the investor the right to collect interest on the delinquent property taxes. In essence, the investor is loaning money to the property owner to pay their tax debt. Over time, this investment could potentially become a superior lien, taking precedence over other liens placed on the property after the tax sale.
Delving into Tax Deeds
On the other hand, a Tax Deed allows an investor to purchase a property outright. This method is typically used as a means to profit from tax-delinquent real estate. When a property owner fails to pay their taxes, the government can sell the property itself, rather than just the lien. The investor then pays the delinquent taxes and in return, receives the property deed. This method transfers the ownership of the property with delinquent taxes to the new owner.
Tax Lien Certificates vs Tax Deeds: A Comparison
While both Tax Lien Certificates and Tax Deeds offer lucrative opportunities for real estate investors, they come with different risks and rewards. Tax Lien Certificates typically involve less risk as the investor does not own the property but has the right to collect the delinquent taxes along with interest. However, the process can be lengthy and the investor does not have control over the property.
In contrast, Tax Deeds offer the investor direct control over the property, as they become the new owner once the deed is purchased. Although this comes with higher risk, it also allows for greater potential profits, especially if the property's value increases over time.
Conclusion
In the end, the decision between investing in Tax Lien Certificates and Tax Deeds depends on the individual's risk tolerance, investment goals, and market knowledge. Both offer unique opportunities to profit from the real estate market and with careful consideration and due diligence, can form a part of a well-diversified investment portfolio. As always, it's recommended to seek professional advice when venturing into new investment territories.
#taxdeedinvestments #taxlienbuyers
Understanding Tax Lien Certificates
A Tax Lien Certificate is essentially a claim against a property due to unpaid property taxes. When property taxes become delinquent, the government auctions off a lien certificate to the highest bidder. This certificate gives the investor the right to collect interest on the delinquent property taxes. In essence, the investor is loaning money to the property owner to pay their tax debt. Over time, this investment could potentially become a superior lien, taking precedence over other liens placed on the property after the tax sale.
Delving into Tax Deeds
On the other hand, a Tax Deed allows an investor to purchase a property outright. This method is typically used as a means to profit from tax-delinquent real estate. When a property owner fails to pay their taxes, the government can sell the property itself, rather than just the lien. The investor then pays the delinquent taxes and in return, receives the property deed. This method transfers the ownership of the property with delinquent taxes to the new owner.
Tax Lien Certificates vs Tax Deeds: A Comparison
While both Tax Lien Certificates and Tax Deeds offer lucrative opportunities for real estate investors, they come with different risks and rewards. Tax Lien Certificates typically involve less risk as the investor does not own the property but has the right to collect the delinquent taxes along with interest. However, the process can be lengthy and the investor does not have control over the property.
In contrast, Tax Deeds offer the investor direct control over the property, as they become the new owner once the deed is purchased. Although this comes with higher risk, it also allows for greater potential profits, especially if the property's value increases over time.
Conclusion
In the end, the decision between investing in Tax Lien Certificates and Tax Deeds depends on the individual's risk tolerance, investment goals, and market knowledge. Both offer unique opportunities to profit from the real estate market and with careful consideration and due diligence, can form a part of a well-diversified investment portfolio. As always, it's recommended to seek professional advice when venturing into new investment territories.
#taxdeedinvestments #taxlienbuyers
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