@lesliesamkim great questions. Let me try and clarify this for you…
There are basically two different paths you can take when getting your list. Neither path is “better” than the other, there are just a different set of pros and cons with each.
Path 1: Delinquent Tax List
Pros:
The people on this list tend to have a much higher sense of motivation because for one reason or another, they’re all delinquent. This is often an indication that they don’t want the property, can’t afford it, aren’t interested in it, or perhaps they forgot they own it. Many of these owners see their property as a liability, not an asset, and because of this, it’s much more feasible to make low offers and get some of them accept it (because in their eyes, you really are doing them a favor).
Since you’re getting the data directly from the county (not through some third party data service), the information you’ll have is as current and updated as possible. This doesn’t mean it will be perfect, but sometimes it will be better than what you’ll get through a data service.
Cons:
This list is harder to get and is usually more difficult to sort through because every county uses a different system. Things like customer service and “ease of use” are not the county’s primary concern. You’ll also find that some counties will charge a small fortune for the list, and others simply won’t give it to you at all (and in either case, I don’t bother to fight them for it, I just move on to a different county until I find one that makes it easier).
Depending on how you scrub a delinquent tax list, you may also find there are more “junk” properties on this list (oddly shaped, inaccessible or unusable for some reason) and the property isn’t worth much. Sometimes you can find hidden opportunities here (I’ve found landlocked properties can be bought VERY cheap, and often sold for higher enough to make a profit - so sometimes you have to see past the initial issues that come up).
Path 2: Data Service (DataTree, PropStream, etc)
Pros:
These lists are much easier to get and easier to sort through. The filtering options in a data service will give you a lot more flexibility to decide who should be on your list before you even get it. However, there can be a lot of gaps and missing data in some counties, because the county simply doesn’t report all the information and the data service won’t always spell out which information is available and which isn’t.
If you’re working in a county that maintains good, current data records (most California counties are very good), a data service can be incredibly useful, because the data is actually available. However, if you’re working in a county with spotty or stale data, a data service can steer you wrong or be frustrating in some cases, because it looks like it should work, but it won’t - because the components you need (the data) aren’t available.
If you pull your lists from a data service, you will save yourself a TON of time and mental energy, but if you want a truly exceptional response rate, it’s still going to take a bit more work to scrub the list and eliminate the wrong people from the list. If you aren’t willing to do the additional work, you’ll end up spending a lot more money on mail with a lower response rate (and many people who use data services simply accept this, because their saved time is worth it).
Cons:
I don’t know of any data services that will give you a consistent, nationwide way to sort by tax delinquent status. This isn’t necessarily a huge problem, it just means you won’t be able to sort lists in a way that points out this helpful “motivation” factor.
Some counties can also be several months outdated (usually the more rural ones), so it’s important to make sure you’re working with current information. DataTree and PropStream will both allow you to see how current the data is, but not all data services will show you this.
There’s also the ongoing cost of your data subscription if you use one. As long as you’re using it consistently, it’s very much worth the cost, but if you’re more of a hobbyist who doesn’t use it often, it’s an additional cost you’ll have to deal with.
Which path should you take?
It depends on what you want to prioritize. If you want to spend less money on mail and if you’re willing to spend several hours sorting each list to maximize your response rate (this can be a very tedious task, but can also pay big dividends), then the delinquent tax list is probably your best bet.
If you’re okay spending more on mail and less time and mental frustration sorting through lists, then a data service is probably your best bet.
When I got started, I had very little money to spare, so I chose to use the delinquent tax list. I spend MANY hours sorting through each list, but it resulted in a great response rate and a lot less wasted money on mail.
I personally think this can be a good way to burn out long term (unless you can find a good VA to do this scrubbing for you), but if you’re looking for some early wins without wasting a ton of money, it could be worth the extra effort in the beginning.
