The Three Ways to Buy Arizona Tax Liens

By far the most popular and straight-forward way to acquire Arizona tax liens is to buy them at the annual Arizona tax lien auctions.

• Advantage:  Typically the best liens are sold at the auction, leaving the more problematic properties remaining.
• Advantage:  The dollar value of the liens which are sold each year at the various Arizona tax lien sales is quite large.  If you want to invest more than, say $10,000, in an Arizona county, it is much easier to achieve that level of investment at the auctions vs. the OTC or secondary markets.
• Disadvantage:  The auctions are very competitive, and the rates at which liens are won is usually well below the state’s rate of 16%.
• Disadvantage:  All 15 of Arizona’s counties hold their tax lien sales during the month of February.  If you are not able to attend the sales at that time, you will need to wait until the following February to participate in any Arizona tax lien sale.

People who miss the February auctions may buy tax lien certificates directly from the counties via the Over-the-Counter market (OTC).  Most counties will give you a list of the tax liens that are available at the time of your request, and after careful research, you can purchase these liens directly from the county.

• Advantage:  All liens bought over-the-counter from the counties will accrue at the state’s 16% rate — you will not have to compete with other investors to win the lien at a lower interest rate.
• Advantage:  You can be relatively efficient with your research, as you have a very high likelihood of being able to purchase any of the liens that you want after the auctions are over.   When you are participating in the auctions, you will likely research a large number of liens for every lien that you actually win (unless you bid extremely low rates), as you are in competition with many other bidders.
• Disadvantage:  OTC liens can be more difficult to research than the liens that were sold in the February auctions.  In fact, many of the properties that are available in over-the-counter tax lien sales are available precisely because they are more difficult to research (often there is missing data or the parcel is difficult to locate on a map).  Many are also of questionable value, as you will likely find liens on useless scraps of land that  may not redeem and that you may not want to end up owning.  Remember, many  experienced investors participate in the February auctions, and if they failed to bid on a lien, perhaps they had very good reasons for doing so.

A third way of buying Arizona tax liens is via a secondary market such as the one on this site (available under the “Listings” tab).  The tax lien secondary market is where individual investors in tax lien certificates sell their liens directly to other investors.  This is a very exciting and potentially lucrative way to acquire Arizona tax liens, but again, you must do your research before purchasing.

Some of the Arizona tax liens for sale in the secondary tax lien market are eligible for immediate foreclosure, others are being sold at a discount to reflect either the questionable quality of the underlying property or the seller’s wish to find a buyer quickly.  There are many reasons that people sell their Arizona tax lien certificates; sometimes there is a death in the family and the entire portfolio is put up for sale, other times a seller does not wish to foreclose and is looking to be redeemed by another investor who will then go forward with the foreclosure proceedings, some people find themselves needing liquidity, and this is the only way for them to sell their unredeemed liens, other sellers want to get rid of their purchasing “mistakes”, however we have found that at the right price, someone else’s “mistakes” can be your opportunity.  Again, it is imperative that you do your own research and due diligence before buying a tax lien from another investor secondary market for tax liens.

It is also important that you do NOT pay any fees for the purchase other than the transfer fee charged by the county.  There are many scammers out there who offer liens for sale via online marketplaces such as Bid4Assets or Ebay, where the seller or the marketplace charges you a large fee.  You should always consider how fees will impact your investment return before investing.

• Advantage:  People who want to sell their tax lien certificates have few options, and some may be willing to sell perfectly good liens at a discount.
• Advantage:  Investors who are interested in properties that they can foreclose on, will have shorter waiting periods than if they bought at the auctions, as the three-year holding period before the owner of the tax lien certificate can initiate a foreclosure lawsuit starts from the day that the certificate was issued.  Several of the liens currently available on this site can be foreclosed upon right now.
• Disadvantage:  There is an element of trust inherent in purchasing a lien from another investor.  First of all, it is possible that the seller is offering their tax lien certificate for sale because they know something about the underlying property that makes the investment  unattractive.  Secondly, while each county has an official process for transferring Arizona tax lien certificates from one investor to another, there is a point in time when the seller has your money, but you are not yet the registered owner-of-record.  If the seller were to fail to do his/her part of the transfer,  you would have your work cut out for you to get your money back or to pressure the seller to complete their part of the transaction.