The bidding inside a packed Charleston County Council Chambers seemed at times as fast paced as any other auction—two bidders going at it to buy another person's debt. Think of it as a “One man gathers when the other man spills” type of thing.
On Monday the annual Delinquent Tax Sale kicked off, tax bills from hundreds to hundreds of thousands are bid on. The winning bidder must pay this year's and the previous year's tax debt as well as any fees on another person's property. Why buy this tax debt? There are a couple of reasons.
If the real property owner doesn't make good on the debt within a year from when the tax debt was purchased, the person who bought the debt keeps the property. That scenario plays out about 20-percent of the time.
Also if the actual property owner decides to square up with the county and pay all the tax debt owed after the debt was purchased, the bidder gets their cash back and all interest on the money owed.
Because the interest rate goes up 3-percent every 4-months, the return can be as high as 12-percent in a single year; either way the debt buyer is a winner says Tami Fralick head of Charleston County's tax revenue collections.
“You're going to see the high dollar investors no matter what because it's such an easy return on the money and you know in the end you are either getting your money back plus interest or you are getting a piece of property- and there are some really nice properties.”
The bidding was from 10am to 5pm on Monday and will resume again on Tuesday until the properties are sold.