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Post-Auction Tax Sale Investing Tips

Rachel Seidensticker
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Introduction to Post-Auction Tax Sale Investing

It’s easy to picture tax sale investing always going the same way: doing the required research for an upcoming auction, getting your investment capital ready to roll, and casting a winning bid for a tax-delinquent property. 

This common-sense approach is an excellent foundation for tax-sale investing – but it doesn’t always bridge the gap between theory and practice.

Tax sales are diverse, and property sales come in all shapes and sizes. 

This truth is especially plain when an investor wins a bid and receives a property fraught with issues, including multiple owners, unresolved mortgages, and infighting among interested parties.

Fortunately, Karl Spielvogel has developed a way to help investors maximize their investments after a tax sale. While addressing issues before the sale can smooth the road ahead, tax sale investments aren’t always straightforward. The auction process in most states runs at a steady clip, giving investors limited time to research and negotiate with owners.

As a result, Karl saw a gaping need for a comprehensive post-sale approach for tax sales. This North Carolina-based investor recently spoke with Brian Seidensticker, Tax Sale Resources CEO, to drop some nuggets of wisdom for tax sale investors to access untapped surpluses in post-sale tax-delinquent investing.

Karl has previously provided excellent guidance for investors in the pre-auction tax sale space. However, his investment model also applies to post-sale properties, whether you're the property owner or reviewing past tax sales in your area. Karl's model empowers you to anticipate risks and navigate seemingly impossible situations. 

So, let's dive in and see how to turn hefty profits through post-sale tax sale investing. 

Follow the Surplus

The foundation of post-sale investing is leveraging surplus funds. 

Surplus funds (also known as overages) are the money left over from a property sale after the delinquent taxes are paid. 

The person who owns the home at the time of sale has a right to these proceeds.

As Karl outlined in his last interview, one strategic approach is to secure shares before the sale. However, post-sale surpluses often emerge because tax sales are complicated. Fortunately, Karl has developed a toolkit to help investors chase the surplus after the auction.

Collect Commissions from Heirs

When a property sells at auction, the owners should receive excess funds. While this principle is simple, real-life tax sales are typically messy. 

Fractured family relationships, lack of information, and misunderstandings of the tax sale process often prevent heirs from receiving the funds they’re entitled to from a property sale.

This is where a savvy investor steps in to help. You can research past property sales for transactions that created hefty unclaimed surpluses. Then, you’ll do some homework to discover the last heirs/owners of the property and help them claim the money they weren’t aware of. 

For instance, if a deceased owner has two children, those are the heirs to contact. You’ll contact them and explain how the tax sale situation has created a lump sum they have a right to collect. 

As a tax sale investor, you can extend your professional expertise to obtain the money for them in exchange for a commission (usually between 30% and 40% of the total). Because the funds aren’t immediately accessible due to competing lienholders (such as a lender wanting to collect on an outstanding mortgage), your intervention and legwork are essential to the heirs receiving the shares.

Remember, this strategy isn’t viable in every state. 

For instance, North Carolina only allows investors to claim $1,000 of commissions for finding surplus funds on behalf of the heirs. So, it’s crucial to understand your state’s statutes before pursuing this path.

Buy Off Interested Parties After the Auction

Fortunately, the commission strategy is just one of many. You can also win a property at auction and then resolve issues with interested parties while you prep the property for sale. 

For example, Karl recently found a property with $25,000 of delinquent taxes. He knew he had to clear the title of interested parties to maximize profits.

In this case, a fractured family owned the property. So, Karl contacted all the heirs and discovered that some family members weren’t getting along. 

Additionally, some of them didn’t even know each other. He explained the situation to each interested party and, in doing so, bought out as many of their shares as possible.

Karl ended up owning 92% of the home and sold it for $216,000. After accounting for the delinquent taxes, purchased shares from the heirs, and attorney fees, Karl netted about $165,000.  

Meet Judgments Head-On

Judgments can be intimidating because they arise from debts the past owners owe to service providers and corporations. However, judgments typically don’t give lien holders the right to seize the home or collect the first share of profits after the home sale. Additionally, companies sometimes lose track of the judgments they hold or give up on trying to collect payment.

These aspects give you the upper hand when conducting due diligence on recently sold properties. 

For example, you might see that a property recently sold for $80,000 after the investor purchased it for a few thousand dollars. However, you also see that a specific company has a 20% share in the property because of a judgment. Additionally, the judgment is about to expire, meaning the company will soon lose the right to that money. You can call the company and make a deal: You help them recover the $16,000 they’re entitled to for a 40% cut.

This strategy can work even if the company is out of business. You can usually get the contact info for defunct companies through your Secretary of State. You’ll get the owner's phone number and call them to explain the situation.

Prioritize the ‘Trifecta’ of Karl’s Business Model

Karl looks for three crucial traits in each property: vacancy, tax delinquency, and a deceased owner. Together, these three characteristics create a ripe investment opportunity. While not every property fits this ideal profile, it is essential to jump on these opportunities when you find them.

For example, Karl acquired a property at auction that matched the ‘trifecta’ of vacancy, delinquency, and a deceased owner. So, he reviewed the owner’s obituary to begin researching the family tree. He discovered that there were four heirs in all, each with a 25% share in the property. He negotiated with three of them, paying them $8,000 each for their shares.

Despite Karl’s best efforts, the fourth heir refused to discuss the property. This reflects the reality of property investing: not every situation goes according to plan. However, Karl continued, undeterred by the final heir. With 75% ownership of the property, he collected $66,000 of the surplus proceeds after the sale.

Embrace Foreclosure Opportunities

Foreclosures are also fitting post-sale tax sale investments. In another example, a member of Karl’s team found a property in foreclosure. They skip-traced the owners, who turned out to be a divorced couple struggling to cooperate and sell the property. He offered the divorced couple $750 each for their shares, offering them a financial incentive and an easy out.

Karl also found an IRS lien on the property of $10,000. Fortunately, it was set to expire in about 9 months. So, Karl waited out the lien expiration and then sold the house for $27,111. Investment costs totaled $2,556, equating to a solid ROI of 1,076%.

Additionally, judgments are a pathway to profits for foreclosed properties. For instance, Karl was researching recent foreclosures and came across a property in decent condition. First, he found the heir with the majority ownership of the property. Karl paid them $500 for their share, taking them out of the picture.

Second, he found a judgment from a service provider for $11,530 – a more challenging problem. However, he also noticed that the judgment had about a year before it expired. Not wanting to wait another year to sell the house, he used this fact to his advantage. He contacted the judgment-holder and explained the situation, offering $2,200 to erase the lien.

Doing so allowed Karl to claim full ownership of the property. Specifically, paying $2,200 to acquire the judgment added $17,000 more to his profits when he sold the home. So, buying old judgments can work both pre and post-sale. Remember, persistence and thorough research are the keys to success.

Bankruptcy Doesn’t Cancel Ownership

Owners with extenuating circumstances don’t realize they sometimes retain shares in their old properties. 

For example, bankruptcy can muddle a situation, preventing the prior owner from collecting on a tax sale.

Karl found a homeowner in this exact scenario. While researching foreclosed properties, he came across a home with a free and clear title. Upon closer examination, he realized that a new bank had acquired the old owner’s mortgage after the original mortgage bank had gone out of business. So, the mortgage was gone, and the delinquent taxes were the only debt attached to the property.

Karl contacted the old homeowner and notified them about this. The homeowner expressed confusion, saying she thought she didn’t own the home because she declared bankruptcy. 

Fortunately, Karl’s quick title search revealed the facts, and he paid the old owner $10,000 to become the new property owner. After paying the delinquent taxes, he sold the home for a $42,000 profit.

Another outcome from this story is that some properties have satisfied mortgages because of banks that went belly-up in the past. 

Specifically, the scenario above involved a mortgage with a bank that dissolved in 2008. Because the financial crisis that year caused a shakeup in the banking industry, stories like these are common across the country. Acquisitions by other financial institutions create long, winding paper trails that can be challenging to track. 

However, untangling the truth can lead to mortgage-free properties that make excellent investments.

Play the Role of Detective

Gathering the necessary information is the foundation for post-sale investing. So, it’s crucial to skip-trace, peruse obituaries, look up heirs on Facebook, and exhaust any other source of knowledge on past and current property owners. 

Remember, the investor’s role in post-sale situations is to connect with heirs and lien holders and work out a deal that benefits everyone.

To that end, Karl’s business is open to helping other investors track down essential information and hammer out deals with property owners. 

He’s an experienced, qualified partner for joint ventures in the post-sale tax sale investment scene. So, if you want extra pointers or a team to help you execute a successful investment plan, email Karl for more. 

Having a knowledgeable attorney is also critical, especially if you’re investing outside North Carolina (where Karl has expertise). Karl also recommends hiring a genealogist to track down the heirs of deceased owners.

Understand the Community Benefit

Last but not least, the transformation of neglected properties plays a pivotal role in the well-being of communities. Abandoned homes can have detrimental effects, such as damaging the value of neighboring properties and breeding pests. Municipalities miss out on taxes from these properties, resulting in less funding for programs and services. 

Fortunately, post-sale investing makes homes habitable again, creating more housing stock nationwide for individuals and families. This leads to increased connectedness in neighborhoods and prosperity in communities.

In other words, an effective post-sale strategy is a net gain for all parties involved: ruined properties are restored, the housing market thrives, and public programs are better funded. 

These outcomes are the reason to pursue tax sale investments through a profitable business model.


Karl Spielvogel's roadmap for post-sale tax sale investing allows investors to navigate the complexities and uncertainties that can deter them from capitalizing on golden opportunities after auctions

His business model demonstrates resilience and adaptability by leveraging surplus funds, addressing challenges with interested parties, and resolving judgments.

Additionally, the combination of vacancy, tax delinquency, and deceased owners is crucial to remember, as these highlight the most fruitful investments on the market. By implementing Karl's insights into bankruptcy scenarios and mortgage complications, investors can bring crucial information to heirs and lien holders to iron out deals.

The resulting financial gains occur alongside the positive impact on communities, transforming neglected properties into renovated homes. 

Ultimately, post-sale tax sale investments through a profitable business model become both a source of high-powered investing and a catalyst for positive community transformation.

Author - Rachel Seidensticker
Rachel Seidensticker
Chief Operations Officer
In the Tax Sale Industry Since 2010
Rachel is responsible for managing and overseeing the daily operations of Tax Sale Resources, which produces data for approximately 8,000 nationwide tax sales yearly. She started in the tax sale industry originally as an investor but decided to change course and team up with her brother (Brian Seidensticker) to build Tax Sale Resources quickly thereafter.

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