I wrote about the tax certificate sales on May 13th and now I have the whole story, first the numbers. Here is the tax roll data so you can see the trend (the first number is how many Tax Certificates the County Tax Collector advertised, the second is the worth of all those advertised, in other words how much the county has NOT collected in taxes):
2003 tax roll - 50,786 properties value $173,105,000
2004 tax roll - 46,375 properties value $177,730,000
2005 tax roll - 50,533 properties value $238,968,000
2006 tax roll - 66,169 properties value $376,468,000
2007 tax roll - 89,795 properties value $523,884,000
2008 tax roll - 85,318 properties value $496,855,000
2009 tax roll - 76,290 properties value $416,286,000
There was a spike in 2007 at the height of the housing crash. Is the rebound the last two years a sign of recovery? You decide. Here is the skinny on tax certificates as an investment opportunity:
Just under 12% of property taxpayers are late with their payments this year. When people are late the county advertises the sale of tax certificates. A certificate that you may buy allows the county to get the money it is owed from you and then you wait, instead of the county (and other taxing entities) to get it from the homeowner. The tax certificate sales are very important for all taxing entities as they need the money to operate. If you buy a certificate you can make up to 18% interest on the deal (there is a bid-down process from that rate by those interested in the certificate). Remember that tax liens are the first liens, paid first before foreclosure. What this process does is give the homeowner more time to pay their taxes, it is like taking out a loan except you don't know your interest rate until the bidding happens.
The tax deed sale process, the end of the line for the homeowner, doesn't kick in till April 2012 for this cycle. That gives homeowners almost an extra two years to pay the taxes with interest and other fees added on. If you can't get a loan, it seems like a good idea -- better than taking a cash advance on a credit card. Only about 100 properties a year get sold for the taxes, so buying the certificates appears to be a pretty safe bet that you will get paid. There is a guaranteed 5% minimum for the first 4 months if the interest rate was bid down to greater than "0". The online tax sales will start on Monday June 1st at 2pm.
5 comments:
I think the actual property values are inflated. Some people, like me, are waiting for abatement hearings to get a real value on my property - including the short sales in my area which is the market right now.
So, even if they buy the certificate on my property, if I win at the abatement, I'll have to pay the certificate, but the County has to reduce the taxes on my property via rebate.
If I had a few extra bucks, I'd be a buyer. As a property owner, it's a shell game at best. I still come out ahead in the end because my refund is more than the interest they charged in the first place.
I wouldn't say things are getting better, might be banks paying property taxes in order to not pay additional interest to certificate buyers.
Things in the RE market have gotten progressively worse since the 07 bubble busted, we are at or close to the bottom now barring any catastrophic stuff like the bottom failling out of the dollar thanks to obama, bush,and all the politicians who don't have a clue past and present.
And one last thing Pedro Garcia is Natasha's and the rest of the commissions do boy.
Real Estate Taxes i.e. Property Taxes could easily go up. First the mileage rate goes up because the fire union and other unions want the elected officials to continue overpaying them. The unions tell the elected officials to overpay them OR ELSE they will endorse an opponent. The elected officials always cave in.
If $100 extra comes into the government $110 gets handed to the unions. It is a diversion of money from those in the private sector who work hard to those who work in the public sector 3 days a week.
If taxes go up the market values of properties will likely go down.
The assessed values might stay high but the actual values will continue to decline.
The unions are crushing our economy for their own selfish goals.
I looked at tax certificates as an investment option once.
Was disuaded when a friend who had played the game explained that the certificates were ,like everything else here, pretty much rigged .
Seems that there is a group of people that "own" the bidding-buying process and they work between themselves to control the sales and rates.
Maybe in another county you might have a fair chance to psrticipate, but not here.
That sounds about right.
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