Bid Down The Percentage Of Ownership
There are several states – Iowa being the most popular now that MICHIGAN IS NO LONGER A LIEN STATE (I have put this in caps to emphasize most of the lien programs or manuals still talk about Michigan as a lien state) that use this system.
What happens is that the property is sold to the bidder who is willing to take the smallest portion of ownership in the property.
This means if you bid below 100% you became a tenant in common with the delinquent taxpayer.
This raises a number of issues, most of which you will find are solved by what actually happens in the auctions. What occurs in most auctions of this type is that the sale becomes a lottery in fact, if not in legal status. I will explain using Polk County, Iowa as an example.
Polk County will allow anyone to bid down the percentage of ownership – they have to since the law requires it. What happens is that the experienced bidders, without any conspiracy, have learned that if someone bids 99% ownership interest, to immediately bid 1% ownership interest (the lowest percentage allowed in Polk County). Please join us for our free workshops if you have any questions http://www.taxsalelists.com/free/772/.
The reason they do this is that nobody wants to be a 1% owner and they want the “newbie” to understand that he/she should shut up and accept those they can get at 100%. This process of education usually takes about 25 minutes and from that point forward the Polk County, Iowa auction becomes a lottery. They have a random number generator which has every bidder’s bid number entered.
They start the machine, it pulls up your number and you tell them “yes” or “no”, meaning that “yes”, I will buy the lien or “no”, I will pass on the lien. If you pass they pull another random number and that person says “yes” or “no”. If the property is passed about five or six times they ask if anybody wants the property, if more than one person says yes they enter those numbers in the machine and pick on of them.
What happens in Polk County is somewhat more sophisticated than what happens in the other Percent of Ownership jurisdictions, but the end result is about the same. Nobody wants to be a 1% owner so each of the sales have arrived at a method where the buyer gets 100% ownership. The usual method of doing this a round robin or lottery of some sort. What these states should do is change their bidding method, since the intent of the law is being ignored.
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