Posted by Courtney Lane on Wed, May 05, 2010 @ 12:20 PM
The Iowa Tax Sales are fast approaching and it is one of my favorite sales. With a 24% per year inte
rest rate, good inventory in 99 counties and less bidders than other states, it should be one of your favorites too.
Most of the Iowa Tax Lien Sales are held on the 3rd
Monday in June. A few counties will postpone their sales a day or two, but for the most part they all take place in a one – three day time span. This can make it challenging to attend more than one sale in the state, therefore making your pre-sale preparation and due diligence even more important.
Why I Like Iowa Tax Lien Sales:
As I mentioned earlier Iowa is one of my favorite states to buy liens in, due to the very high interest rate of 24% per year, or 2% per month or any part of a month.. The state also tends to have a very good redemption rate. There are 99 counties in the state so it is pretty easy to find a number of counties with a fairly low number of bidders.
Iowa Bidding Method:
The “official” method of bidding is on a “percentage of ownership” basis (the person willing to take the smallest portion of ownership in the property wins the bid), the rate is always 24%.
In reality the “percentage of ownership” bidding rarely is the method used, but rather a round robin method is used.
This means that you will get 100% ownership interest and a 24% return. This is a very good deal!
What is Round Robin Bidding?
Round Robin Bidding is a method used by a number of different jurisdictions and is a fairly simple concept. Basically they go around the room in a fixed order and each person is given the opportunity to the buy a lien. You pay just the delinquent taxes (plus any penalties, interest and/or costs) for the lien. Assuming you are seated in an auditorium environment, they would start with one row of seats and go down each seat and offer a lien to you. It is always your choice, you can say yes I will buy it, or no, I pass.
Importance of Public Land Survey System in Iowa:
Anyone going to bid at a Tax Lien Sale in Iowa should become familiar with the Public Land Survey System. This is how the properties are described on the tax sale lists provided. It is crucial that you understand the system and how it works. Also keep in mind, the publication of the lists can be as little as seven days prior to the sale, which does not leave a lot of time to do your homework.
Tips:
In Iowa it is important to understand that if you do not purchase subsequent taxes a new lien will be sold and the new lien buyer may redeem you out. Subsequent taxes earn 2% for any part of a month from the date of payment.
If you would like more information about how the Iowa tax lien sales work, click here and download our white paper on Iowa.