Introduction to Tax Deed Sales in Michigan
Tax deed sales in Michigan are ripe for the picking – but getting into a new market as a tax sale investor means equipping yourself with accurate information first.
That’s where Tax Sale Resources comes in. We have well over a decade of experience in the field and the most robust database in the industry on nationwide tax sales, including Michigan.
Our suite of tools – including Research, Financing, State Directory, and more – gives investors the edge at every auction.
From winning a bid to securing financing while obtaining a clear title, investors can turn to Tax Sale Resources for solutions when investing in Michigan tax sale properties.
So, whether you’re looking to buy a residence in the Detroit metro area or a vacant lot in the Upper Peninsula, we’ve got you covered.
Read on to explore every nook and cranny of tax deed sales in Michigan, how properties in the state can fit your investment model, and the drawbacks to avoid along the way.
The Michigan Tax Auction Process
The Michigan tax auction process resembles other tax deed states with no significant divergence from the typical tax sale process.
However, there are still dozens of details to learn about the Michigan tax auction process and how to win in a competitive market.
Is Michigan a tax lien or a tax deed state?
Some confusion exists because Michigan’s laws have changed in the last few decades, but we’ll make it completely clear now: Michigan is a tax deed state.
For this reason, the state holds tax deed sales. Michigan doesn’t sell tax liens, and there are no indicators that the state is changing anytime soon.
Tax deeds don’t grant interest on unpaid taxes.
Instead, they transfer ownership of the property immediately, leaving no ambiguity about the result of investing.
This way, investors know upfront that participating in tax sales in Michigan means obtaining the deed and becoming the new property owner.
In other words, don’t expect a rate of return when investing in tax deed sales in Michigan.
Michigan law gives property owners three years to pay the delinquent property taxes.
Instead, properties that don’t redeem go to auction. Investors can bid on the tax deed for that property, buying the real estate outright (with whatever issues it may have, including unknown property damage, title issues, and outstanding fees).
The upside is that you own the property and have the ability down the road to sell it or rent it out.
When are the Michigan tax auctions held?
Tax Sale Resources collects annual tax sale data on every state across the country, including Michigan.
Michigan tax deed auctions occur between the third Tuesday in July and the first Tuesday in November every year.
Counties choose when they hold their tax sales within that time frame.
As a result, investors should start monitoring upcoming tax sales in early July each year. This way, they’ll get the jump on the first sales in July and can follow the subsequent sales that occur up through November.
Counties usually have one auction annually. However, a caveat to remember here is Wayne County has two per year because of the sales volume.
So, it’s crucial to put the dates of both auctions on your calendar to ensure you don’t miss a huge chunk of tax deeds in Michigan.
What environment can Investors expect on the day of a Michigan tax auction?
In many states, pre-COVID tax sales were in the process of becoming more internet-based.
In other words, more states have turned to online tax sales in recent years and left live auctions behind.
Michigan has followed this trend, with only a few counties continuing to hold live auctions.
The live auctions remaining in Michigan resemble those of other states: the auction takes place at the county building.
Live auctions usually have a bustling atmosphere, with a county official calling out properties and taking bids from in-person investors. You’ll have to be prepared and aggressive to succeed in this setting.
On the other hand, you can attend online auctions from the comfort of your home.
Instead of driving to the physical auction site, you’ll register ahead of time to attend an online auction. In addition, you can continue researching while the auction occurs and not waste time traveling.
The drawback is you’ll compete against more investors because it’s easier to attend online auctions. It may be worth searching out the scant live auctions left in the state to increase the odds of winning a bid.
What to Expect with Michigan Tax Sale Properties
Tax Sale Resources provides annual Market Analysis Reports for each state’s tax deed and tax lien sales.
You can use them to see which regions offer properties that suit your investment model.
In Michigan, you can expect more competition in the Detroit area and less competition throughout the rest of the state. Specifically, the state sold about 5,000 parcels last year, and almost 2,500 of them were sold by Wayne County.
In addition, 899 bidders participated in Wayne County tax deed auctions, while less than five bidders participated in every other auction throughout Michigan.
Last year, most counties in Michigan sold less than 100 deeds, with Wayne County being the exception.
The state sold about 3,000 residential properties and nearly 1,700 vacant properties.
Therefore, investors focusing on commercial, industrial, or agricultural land will have fewer choices per auction and may only find a few counties worthwhile.
On the other hand, residential investors have thousands of options to sift through.
Either way, the research tools from Tax Sale Resources let you zero in on the areas that fit your priorities, filtering data within seconds based on your search criteria.
Michigan only had one county host a live auction in 2022, demonstrating the overwhelming migration to online auction platforms.
As a result, most investors interested in Michigan must prepare for online tax sales by registering ahead of time.
In addition, you can attend more auctions per year than in other states because you won’t have to be physically present at the county hall to bid.
While Michigan has no state-specific issues or barriers for tax sale investors, it’s essential to contact an attorney in the state to understand legal nuances.
For example, water bills follow houses just like property taxes. For this reason, you could inherit a thousand-dollar water bill the previous owner stopped paying along with the property taxes.
That being said, Michigan is an investor-friendly state overall. As with any tax lien or deed state, due diligence is critical before investing.
Remember, most counties in Michigan had between one and four bidders participate in its tax deed auction last year, and numerous properties were unsold.
These figures indicate opportunities you can capitalize on with the thorough research and preparation you can access through Tax Sale Resources.
Pros of Investing in Tax Deed Sales in Michigan
Tax deed investors in Michigan have a host of advantages.
First, the shift to tax deeds caused counties to want to work with investors, resulting in friendly relationships between municipalities and investors who show themselves as informed and dedicated to caring for the properties they acquire.
Counties typically view tax sale investors as businesspeople putting cash into the community, not hurting the community. Buying tax deeds and turning homes around boosts property values in neighborhoods, increases safety, and increases the local housing stock.
This dynamic lowers barriers for investors, allowing them to jump into the market and help the economy.
Furthermore, Michigan tax deed sales have less competition than other states, such as Florida.
High-competition markets mean more investors are fighting over fewer properties. This situation inflates prices and is more challenging to individual investors.
Conversely, individual investors and small investing groups are likely to find a deal in Michigan. While competition runs hot in Wayne County, getting out of the metro Detroit area means participating in auctions with fewer than five other investors.
You’ll access a market investors have overlooked in favor of other regions and get comparable homes for lower prices.
If you’re after single-family homes, there’s more volume in Michigan than many other states. Specifically, Wayne County is brimming with single-family residences, making the region fit investment models using this property type. One reason for this situation is the economic turbulence over the last fifteen years, which caused tens of thousands of homeowners to fall behind on their property taxes.
Counties have been hard-pressed to find ways to generate tax revenue from these properties, and tax deed sales are part of the answer.
In addition, vacant land was the second most popular type of property sold last year, so if you prefer investing in undeveloped land, Michigan presents vast opportunities.
This property type presents the potential for new developments and appreciation over time.
Cons of Investing in Tax Deed Sales in Michigan
Investors must avoid the pitfalls of doing business in Michigan as well.
For instance, climates that freeze every year (like any area in New England, the Midwest, or the Rocky Mountains) introduce the possibility of frozen pipes.
This circumstance is especially likely for vacant lots and abandoned homes.
If a property in Michigan hasn’t received attention in several years, there’s a solid chance that pipes and other parts of the house are damaged from the cold.
So, busted pipes might break your budget when you calculate remodel expenses for a property you acquire – another reason why doing your homework before investing is necessary.
In addition, it’s advisable to double-check about flooding in the area. While coastline properties aren’t unique to Michigan, the Great Lakes create ample amounts of coastline for properties. While the state doesn’t flood more than others with inland lakes and houses on the coast, any region with that much water can cause an issue.
Michigan also comes with the standard risks of investing in a tax deed state.
For example, paying well over the opening bid can present more financial danger. While these overages can create more interest revenue in a tax lien state, going over the opening bid in a tax deed state increases your cost.
A bigger bid may be necessary to win the property, but that doesn’t always translate to a higher return.
Furthermore, Michigan’s three-year redemption period can mean the property sits in neglect for a long time.
For example, when a homeowner abandons a house, they expose it to pests, storms, freezing cold, and more for years before you take possession. Making the home inhabitable again can take more time and money than you first budgeted.
Expenses can also accumulate from unpaid bills. Remember the unpaid water bill situation mentioned above? You might also inherit municipal fees for an uncut lawn or a pile of trash on the property.
These possibilities are why research is vital before investing in Michigan tax sale properties.
Lastly, purchasing the tax deed doesn’t mean receiving an issue-free title.
Tax deed investing isn’t like using a conventional loan to buy a home from the current owner. You’ll likely pay an attorney to file a quitclaim deed. In addition, you might clash with other interested parties who seek compensation related to the property, such as a mechanic’s lien.
Researching Michigan Tax Auctions
Researching tax deed sales in Michigan is about as murky as other states.
While most counties in the state provide Excel sheets of data about available properties, they are rarely thorough enough to inform investment decisions.
Plus, interpreting the data can be challenging without additional tools to narrow your search based on your investment model.
Fortunately, Tax Sale Resources’ platform provides more data than the county assessor. Plus, you’re never dealing with a raw list when you use our tools; instead, you filter the information to fit your investment preferences, meaning you’re always viewing properties that are relevant to your business.
Financing Your Michigan Tax Sale Properties
Grasping the financial aspects of Michigan tax deed investments is an essential stride toward securing your success.
Tax Sale Resources' financing program, initially tailored for Texas and Georgia, seamlessly adapts to Michigan's dynamic market.
Operating as a capital partnership rather than a traditional lender, our financing program offers flexibility and supports multiple transactions.
Standout features include substantial capital for property purchases, allowing investors to choose between refinancing or securing a more extensive line of credit.
The streamlined application process ensures funds are typically available within weeks, providing a timely replenishment for your account in preparation for upcoming auctions.
Leveraging our financing program becomes a strategic move for investors with established successful models, significantly amplifying their potential for success.
Insights for the Future of Tax Deed Sales in Michigan
To navigate the evolving landscape of Michigan tax auctions successfully, you need a keen understanding of legal considerations, current trends, and potential implications.
As you prepare for your tax deed ventures in Michigan, keep these key insights in mind.
The Michigan tax auction system is generally investor-friendly, but nuances exist.
It's crucial to consult with a local attorney well-versed in Michigan real estate law to navigate potential challenges. Understanding the legal landscape, including elements like water bills and property taxes, ensures a smoother investment process.
The legal precedent set by cases like Tyler v Hennepin may influence future tax deed sales.
Explore the ramifications of such cases and stay informed about any shifts in legislation that could impact the Michigan tax auction environment.
Drawing from our extensive database, Tax Sale Resources provides forward-looking insights based on data analysis.
Anticipate market trends, identify emerging opportunities, and position yourself for success in future Michigan tax auctions.
Conclusion
Embarking on a Michigan tax deed investment journey requires more than capital—it demands knowledge and strategy.
Whether you aim for a residence in Detroit or a secluded lot in the Upper Peninsula, Tax Sale Resources' suite of tools, research capabilities, and capital partnerships empower you at every stage of the process.
As you dive into the Michigan tax auction nuances, remember that Tax Sale Resources isn't just a service; it's your key to unlocking the potential of this lucrative market.
Navigate challenges with confidence, leverage our insights and financing program, and turn the Michigan tax deed opportunities into a prosperous reality.
