#7 – Second Chance Sales

These will be different in every area (some areas might not even have them very often).

Basically, when properties or tax liens don’t sell at the original sale, the county becomes stuck with them and the taxes are still not being received.

In many areas, the county will begin to make the terms of sale more attractive to the buyer.

This comes in two main flavors – price reductions and more favorable terms.

Price reductions can be significant – I’ve seen properties with $12,000 tax liens that went unsold, get reduced to less than $1,000. You almost can’t lose buying a tax lien against a property that’s in serviceable condition.

Better terms also come with many second-chance tax lien sales also – mainly in the form of much shorter redemption periods. In my state of Indiana, the redemption period goes down to a very palatable 120 days for second-chance sales.

Plan on Taking Title!

These properties redeem much less often than first-round liens. It’s not uncommon to take title to 50% of the properties on the liens you buy. The main thing to be careful of, is that the property has SOME value, and don’t forget you’ll have $1000 or more in legal expenses to cover as well.

The reason so few redeem? Even though you as the investor got a great deal (at $1000 in the example above), the owner of the property still has to pay the FULL amount to redeem – which by now ISN’T such a good deal for anyone.

I wrote a 4-part series detailing Indiana second-chance sales, which is a good primer for any state’s system. It starts here: Indiana Commissioner’s Sales

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