Maryland Tax Sale What Is A Bid Premium
A question for anyone with greater insight than I.
If anyone here has attended a Tax Sale in any of the Maryland counties, perhaps you would be so kind to help me understand the following:
“All successful bidders must pay the amount of back taxes, interest and costs plus a High Bid Premium (if applicable) by 4:30 pm on the day of the sale. The high-bid premium is 20% of the amount by which the bid exceeds 40% of the property full cash value”.
Being new to this, I assumed that your bid amount due at the end of the sale consisted of the back taxes, interest and costs. That I understand. What I don’t understand is this, “High Bid Premium”.
They base this premium on a percentage of the “purchase price” and use the example of $100,000.00, which brings me to this. I thought you were bidding on the past due taxes and fees. A “purchase price”? What “purchase price”? Where does “purchase price” come into this?
So let’s imagine that, using the above information, your alleged “purchase price” is $40,000.00 and there is no “High Bid Premium”, when is this $40,000.00 due and to whom is due?
I thought you were trying to obtain control of a property for a few thousand dollars. Now it’s $40,000.00 plus any and all taxes and fees due?
Can anyone help with this?
Something sounds suspiciously illegal in this scenario. The state govt should not be able to mandate an investor hand over a percentage of home value, as that equity in the property does not belong to them, it belongs to the bank or the mortgage vendor. This sounds very much like stealing. The investor forks over a huge chunk of change (to my knowledge not getting interest on this "premium"
so that the state govt can temporarily pocket the extra $ to earn interest. Nope, it does not sound legit.
Am i crazy? On this point, anyways?