Secondary Market Listings of Arizona Tax Liens

We have been getting much more interest recently in secondary market listings for Arizona tax lien certificates. Perhaps this is because money market and bond market yields are near zero, or maybe it is because the stock market creates too much indigestion? Whatever the reason, we are happy to help, and we appreciate the feedback we have received.

First, posting listings on the Listings page of our site is free, so long as you are offering a manageable number. If you are trying to sell an entire portfolio, it would be better for us to write a blog post for you with an attachment that people can download. The point is: we do not charge anyone fees for facilitating the secondary market for Arizona tax liens. We will introduce interested buyers to the sellers directly and leave the rest up to you.

We caution investors from purchasing secondary market liens from some other sites that charge large settlement or service fees. One common scam is to offer a low-value CP while charging a high transaction fee. We strongly urge investors to do their homework, understand what they are buying, and be very careful not to agree to fees which are often excessive and unjustified.

People will not want to visit our Listings page if someone is trying to sell scratch-and-dent CPs for full price, so we reserve the right not to post anything that is overpriced, in our opinion. Also, if something is getting stale and not moving, we will either ask that you lower the price or remove the listing.

We have seen numerous situations where, through hard work, people have recovered full value on scratch-and-dent CPs. You can learn a lot from working with these situations, but please know that the risks are high.

To see how to read one of the listings, the following steps will take you through the process using a real example.

• Click on the Listings tab of our navigation bar. This will take you to a Terms and Conditions page, which you must agree to in order to see any listings. Also on the Terms and Conditions page, you will find a few ways to filter the listings that you would like to see. The most common filter will be to select a particular county of interest. If you do not use any of the filters, you will see all of our current listings that have been posted. (Please be aware that we cannot list CPs with incomplete information. We actually have a large number of Mohave County tax liens for sale right now at deeply discounted prices, but we cannot present them due to some missing information. Interested investors should inquire by email.)
• After hitting the Submit button, you will be taken to the listings of secondary market tax liens available for sale from our clients. Each listing consists of a summary row (beige background) and detail rows (white background) that can be unhidden by clicking on the green plus sign to the left of the county name and parcel number. The parcel number is itself a hyperlink to county-provided information on that specific parcel.
• While most of the listings on our site are from clients, a small number are from affiliates of AZTLS. Let’s take one of them as our test case: Gila 208-10-012-B.
• The summary row for Gila 208-10-012-B has ten columns, each of which we will explain.
1. The green plus sign expands the selected listing to show more detail for the CP.
2. The Jurisdiction column shows the county in which the parcel is located.
3. The Parcel column has the assessor’s parcel number for the CP, and it functions as a hyperlink to the county web site information for that parcel.
4. The CP date originated is the date that the CP was first offered for sale. This is the date that starts the clock ticking for the three year period before the investor is able to foreclose. Our example CP was purchased at auction on February 20, 2009.
5. Column 5 has the interest rate on the CP. In this case, it is 16%, the maximum.
6. Column 6, Principal Face, is the sum of the original and subtaxed principal amounts for the CP. This is the amount on which the CP is earning interest.
7. Column 7, Principal Price, is the price at which the investor is offering to sell their CP. In this case, we are offering this CP at 98%, a small discount to full value.
8. Column 8, Accrued Charged, is a Yes or No. If an investor wants to be paid for interest accrued to-date, they will put a Yes here. If they do not require payment for interest accrued to-date, they will put no. If Yes is selected, the accrued interest on the CP is added to the principal times the price to determine the total amount required to purchase the CP. Normally, solid CPs will require payment of accrued, while scratch-and-dent CPs will not.
9. Column 9 is the Purchase Amount, the full amount required to buy the CP, excluding the $10 assignment fee charged by the county. This is the Principal Face times the Principal Price, plus the Accrued interest if it is being charged.
10. The final column is the most recent Full Cash Value of the property in question per the records of the county assessor, when it is provided.
• The detail rows for Gila 208-10-012-B each have eight columns. Before the detailed information, you will see the CP number. Also, when provided, you will find Seller-provided, subjective notes at the bottom of the detail section.
1. Column 1, Tax Year, indicates which tax year is covered by a particular row in the CP detail.
2. Column 2, Accrual Start, shows the date that interest began accruing on the Principal amount for a particular tax year. This will normally be an auction date for the CP’s first year and subtax dates for later years.
3. Column 3 repeats the rate for the CP.
4. Column 4 shows the Principal amount for each tax year covered by the CP.
5. Column 5 shows the number of months for which each tax year principal amount has been accruing to date.
6. Column 6 shows the amount each tax year for a CP accrues each month. This is arrived at by multiplying the principal amount for each tax year by the Rate / 12. In the case of our example, we subtaxed CP 9032507 (Gila County tax lien on parcel 208-10-012-B) for the 2010 tax year on June 9, 2011. As of today, August 10, 2011, it has earned two months of interest. The subtax payment was $3,950.47. At 16%, this equates to a monthly accrual of $52.67. So, the accrued interest as of Aug 2011 is $105.35 on the 2010 tax year part of the CP.
7. Column 7 shows the total accrued interest for each tax year covered by the CP.
8. Column 8, the final column, shows the full principal amount plus accrued interest for each tax year covered by the CP.
• Summarizing the example listing, we are offering this CP for $15,914, which is a $265 discount to the full redemptive value of the CP. Note that this CP will be eligible for foreclosure on February 20, 2012, three years from the date it was first purchased at auction.

Of course, if anyone needs further explanation of how our Listings page works, please feel free to send us an email via our Contact page. Better still, write a reply post to this blog post!