Tax Sales and COVID19

Transcript:
Welcome to the Tax Sale Podcast, where tax sale investing is made easy. My name is Casey Denman, I’m a tax sale veteran, the leading tax sale expert, author of The Tax Sale Playbook, founder of The Tax Sale Academy and I’m your host right here on The Tax Sale Podcast.

Thank you so much for joining me on today’s podcast episode. This is a completely free podcast and is brought to you through and because of The Tax Sale Academy. If you’re looking to learn more about investing in tax defaulted real estate, just head to TaxSaleAcademy.com. Again that’s TaxSaleAcademy.com.

Alright, on today’s podcast episode I want to talk about the current trends that we’re seeing in the tax sale industry. In early April, I recorded a podcast episode and YouTube video detailing what would lie ahead of us as tax sale investors in the wake of the COVID outbreak. Now that we’re nearly four months into this pandemic, I wanted to circle back and touch on this topic,

So let’s first discuss the real estate market in general. One would think that a pandemic would’ve substantially slowed down the real estate market. And that might’ve been true for a few weeks initially while everyone got a grasp of everything that was happening. But the truth is that the real estate market continues to be fairly strong in most areas. Obviously this varies based on social distancing guidelines that have impacted local commerce and employment, but we certainly have not seen the crash that some expected. Of course, the stability of the housing market is also helped by the feds rate cuts to near zero levels.

As tax sale investors, depending on your strategy the trends of the real estate market in general might or might not impact you too much. I mentioned it numerous times that I’ve done well both in up markets and down markets, albeit with much different approaches. Obviously, there is a time to chance strategies so you always need to watch for trends in your own personal strategies. But in short, the real estate market is still strong.

Now let’s focus on the tax sale side of things. The things you’re probably most interested in.

Before we do that, let me add two bits of information to help set the stage. It’s important to remind you that we’re talking about tax foreclosure here and NOT bank foreclosures. In many areas, the two have been treated much differently by the local and state governments. So don’t lump these together just because you saw foreclosure were not being handled right now.

Secondly, just know that I’m going to be speaking about all states in generalizations. YES, I absolutely know that some areas are doing things differently than other areas. In fact, most areas are different from one another in the way that they are handling things. But, as we discuss this, the information is mostly an average of what I’ve seen take place across the country.

In many states, we have seen some changes in the delinquent tax system – typically what we’ve seen is the current tax deadlines are being pushed back some. We must remember that the tax foreclosure system allows for at least two and maybe up to five years before someone loses their property. A lot of areas have allowed extensions of 30-90 days for the delinquent taxes to get paid. In tax liens states, this might also push back a tax lien sale for a corresponding period of time, but that’s about the extend of the impact. In many of the tax deed states the extensions won’t impact us since pushing back the due date for the taxes doesn’t necessarily change the date for the foreclosure process to begin.

We also must remember that the show must still go on. The real estate tax system is designed to insure our cities and counties will meet their budget so they’re able to provide the services we expect, services such as schools, roads, road maintenance, sidewalks, libraries, parks, water conservation, fire and law enforcement. Most of these things are constants that, pandemic or not, must still be funded. While a reprieve is nice, they just simply can’t cancel all of the tax debt incurred, otherwise we’d face the elimination of these things. Not sure about you, but I certainly enjoy having paved roads to drive on, right? The point is that the tax foreclosure system will never just stop. It’s been around for centuries and isn’t going anywhere. The properties ready for an actual sale or a lien foreclosure have been heading that direction for years. So while some areas have postponed sales, it certainly won’t stop the sale entirely. As tax sale investors, we might have had a period of time where we had to simply stand on the sidelines waiting for the counties to figure everything out but it’ll all return to normal very soon, if it is already hasn’t.

Initially, many states did have delays related to logistical issues involved with holding the tax sales. In person auctions couldn’t be held because of social distancing guidelines. Online auctions couldn’t, in some cases, be managed properly because of the stay at home orders. And others simply weren’t in a position to make changes without first implementing the proper process for these changes. If you’re used to having your staff monitor online auctions from your office for example, then everyone is suddenly stuck working from home, it creates challenges to overcome.

Along with these issues we must discuss the transition that I’ve seen many counties making to online platforms. This is something that I’ve been seeing over the last decade and a half or so now, so it’s not new, but more counties are realizing that online sales are the future. The COVID outbreak really seemed to speed up this process. From a county perspective, it’s certainly often much easier to handle the sales online than have to setup an in person auction. This is a trend I fully expect to continue well into the future.

What we’re seeing right now is that it takes time to transition from in person only auctions to online auctions. In some cases, it actually takes legislation to allow electronic sales to take place. In other situations it takes new systems being put into place, contracts with outside vendors and that kind of stuff. And as most of us know, governments aren’t usually all that quick to make changes. But many counties are well into the transition as we speak.

If you’re the oldschool – in-person auction only type, you should probably take the time to get familiar with a computer and online auctions. If you’re the tech savvy, online bidding type, it’s time to figure out how to leverage this to your advantage as you’ll certainly have many, many more properties to add to your selection in the coming months and years, in addition to those counties who have already recently converted. This will ultimately allow you to invest in an unlimited number of properties by leveraging the power of the internet.

My thoughts are that COVID will eventually become less and less of an issue on both the medical and economic side. What many counties and investors have realized, however, because of COVID is that when something isn’t working like it should it’s important to be able to pivot.

From the counties perspective, many have finally realized that this online auction thing is actually the way to go. From the investors perspective, hopefully you’ve realized that things can change. And they can change very, very quickly. Now, whether that’s a good thing or a bad thing really depends on your approaches and your ability to change strategies mid course. I believe that this is an extremely important lesson for all of us to be flexible with how we operate our tax sale businesses and even our finances.

Tax sales are going anywhere. It’s up to you now to decide the best way for you to continue to invest. For many, it’s just a matter of doing more of what you’ve been doing. For others, it might require that change in direction. Regardless, the tax sale business is strong and there isn’t a better time to get involved in it than right now.

Hopefully this has helped provided an update on my take of the state of the tax sale business amongst the COVID pandemic. This is an absolutely incredible business and I’m so hopeful that you’ll take advantage of the opportunities it provides.

Thanks so much for listening to this week’s podcast episode. As always, if you enjoy these episodes it’ll mean so much to us if you take just a few seconds to leave some positive feedback for us on whatever podcasting platform you’re listening to us on today.

And if we can provide any additional help with your question for tax sale success, there are a bunch of links in today’s show notes, including one to our step by step comprehensize training at TaxSaleAcademy.com.

See you next time on The Tax Sale Podcast.

Take care and make it a successful day.