The Cook County Scavenger Sale has been a uniquely Illinoisan tradition for more than 80 years. Tens of thousands of properties with large unpaid tax bills go up for auction at bargain-basement prices, with the hope that investors will fix them up and get them back on the tax rolls. As an up-and-coming investor, I used to attend every scavenger sale hoping to score great deals on these types of homes.
Finding a worthwhile investment property at the scavenger sale is no easy feat, however. Cook County’s idiosyncratic tax laws can be confusing to new investors, plus you have to contend with the Cook County Land Bank competing for all the best properties. If you want to make the most of the Cook County Scavenger Sale in 2021, you need to learn the ins and outs so you don’t end up with a worthless property or a large tax bill.
What Is the Cook County Scavenger Sale?
To fully understand how the Cook County Scavenger Sale works, you need a basic grasp of the unique property tax system in Cook County. If a property owner doesn’t pay their tax bill, they have up to 13 months to recompense what they owe—with interest. If the owner is unable to do so, their property is listed at the annual county tax sale, and a buyer can then obtain a lien on the property for the price of whatever back taxes are owed. The property owner has to pay back this lienholder the cost of the taxes with additional interest within two years and six months or they lose the property.
If the property isn’t purchased at a tax sale within three years, it gets listed at the Cook County Scavenger Sale. The minimum bid at the scavenger sale is $250, and there’s no requirement that the buyer pays all of the back taxes. The homeowner still has the option to pay their back taxes with interest to have their property returned within two years and six months, or else the scavenger sale buyer can take ownership.
This means that all of the properties available to bid on at the Cook County Scavenger Sale have been tax delinquent for at least three years. Often the homes are abandoned and in rough shape, but some of them are still occupied by the owner or have been receiving regular upkeep and maintenance. The trick is to find these diamonds-in-the-rough, which can be difficult if you don’t know what to look for.
Finding Investment Potential at the Cook County Scavenger Sale in 2021
The bargain-basement prices at the Cook County Scavenger Sale are very appealing to real estate investors. If you know what you’re looking for, you can find amazing deals in Chicago to help you invest more wisely when launching your real estate investment business. However, there are many pitfalls to look for if you plan to bid on a property at the Cook County Scavenger Sale.
The Land Bank
The Land Bank is a Cook County agency that acquires vacant and tax-delinquent properties and rehabilitates them to sell to investors and developers. Cook County gives the Land Bank the power to bid on scavenger sale properties with no down payment, which means they have a financial advantage over private bidders and are often able to scoop up all the best investment properties before anyone else has a chance to bid. Once the Land Bank has made a bid on a property, you can only outbid them by agreeing to pay all of the back taxes on the property, which could be hundreds of thousands or even millions of dollars. Generally, the investment potential of the property isn’t worth the cost of the taxes, so trying to outbid the Land Bank usually isn’t a worthwhile endeavor.
By the time a property is listed at the Cook County Scavenger Sale, its taxes have gone unpaid for at least three years. Many properties on the list may have also been vacant for several years. While there are varying reasons for a property to be abandoned for so long, it generally means it’s undesirable in one way or another. Often these homes are in high-crime neighborhoods with shrinking populations, driving investors away and making the properties essentially worthless. You have to understand Chicago real estate and be familiar with the neighborhoods in which these properties are located to know whether or not you’re investing in a worthwhile property.
A Better Way to Find Real Estate Investments in 2021
Truthfully, I never had much luck with the Cook County Scavenger Sale. Even when I was able to get the first bid on a worthwhile investment property, it always required so much work to renovate that I had trouble breaking even. I knew there had to be a better way to find inexpensive distressed properties in the Chicago area, which is why I turned to HomeVestors Houses®.
Becoming a HomeVestors Houses® independently owned and operated franchisee has given me access to some of the best real estate investing tools on the market. I no longer need to scour the lists at the Cook County Scavenger Sale in 2021 because quality leads come to me. Receiving these leads on distressed properties in Chicago is so much easier with the help of the nationally recognized and trusted “We Buy Ugly Houses®” ad campaign, which has helped HomeVestors Houses® franchisees buy more than 110,000 homes since 1996.
Are you interested in learning how the “We Buy Ugly Houses®” ad campaign can help you grow your real estate investment business? Contact us today to join the HomeVestors® network of independently owned and operated franchises.
Each franchise office is independently owned and operated.