Pima County just finished up its 2012 tax lien sale. Pima County offered up nearly 14,000 tax liens over the two day live auction. One thing was readily apparent this year – the competition for these liens was stiff. The influx of private equity money into the Pima County sale was obvious. Competition for $500 liens was nearly unheard of a few years back, but I saw bidding representatives calling out seven and eight percent for liens on manufactured homes in Avra Valley. In years past, these liens would fetch sixteen percent all day long, but these big money players obviously had money to spend.
Each year Beth Ford, the Pima County Treasurer takes a roll call on whether to continue the live auction format, and each year she maintains the format. Whereas Maricopa County and many other counties have gone to online auctions, Pima County maintains a live auction. While some of the well-healed fund managers decried the result of the roll call, there is no question that the live auction format provides for a spirited auction with potentially uncertain results.
There is not much fun in placing a secret bid and the computer generates the result. It is far more fun to have someone throw up their paint stirring stick with a bright yellow piece of paper stapled to it with a number on it, yelling eight percent on a lien that they did not even mean to buy. It is interesting to watch the furious bidding pace when the sale starts and compare it to when people slip into their 2:00 p.m. post-lunch comas – that is when the bidding mistakes can come out.
It was also interesting to see thirty Richard Kiyosaki (of Rich Dad Poor Dad fame) students roll into the auction on the second day to learn how the whole tax lien process actually works. In fact, I heard a few people say that one of the these green students signed up for a bidder number and actually bid on a lien only to go over the Treasurer and ask that the bid be reversed – proof that there are indeed pitfalls in tax lien investing and, oh by the way, you don’t pick up houses for a couple hundred dollars in tax lien investing, despite what the late-night tax lien seminar peddlers claim.