I’m Ted Thomas, and I’ve been involved in tax lien certificates and tax defaulted properties for more than 30 years as an investor, author and guide.
Today I’m answering your questions about attending your first delinquent tax sale, and the topics I’m going to cover are:
- An Introduction to Tax Sales
- What Happens at a Tax Deed Sale?
- Do Your Homework Before Buying Tax Delinquent Property
- Physically Inspect Tax Delinquent Homes for Sale
- Earn Massive Profits from Tax Deed Investing
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An Introduction to Tax Sales
Let’s get started by saying all counties and states across the United States are authorized by the legislature to confiscate property and sell it at a tax defaulted auction, which is referred to in many instances as a delinquent tax sale – however, it’s really an auction.
To give you a little background, the legislature in all 50 states governs the local county government. Each county is a separate legal entity and uses its own process to auction off the properties.
Half of the states of the United States sell tax delinquent properties at auction, and the other half sell tax lien certificates.
In this situation, the property owner has not paid the property taxes, and in the tax lien certificate states, they do not push the property owner off the property. They’re very benevolent and allow them to remain in place. The county simply auctions the debt, in other words, the unpaid taxes, to the public.
The county accomplishes that online and offline, and to make you aware of the auction, it’s listed on the county website and announced in the local newspaper.
What Happens at a Tax Deed Sale?
Today’s discussion is about attending your first delinquent tax sale.
As I said, it may be called a tax sale, however, it really is a tax deed auction. The auction is open to the public, and the property will be sold to the highest bidder. Also, in most instances, the treasurer will delete the mortgage or deed of trust loan.
What’s going on here? The consequence for a property owner who doesn’t pay property tax may turn into a loss of the property at a delinquent tax sale which is an auction for the property.
Once the government has seized the property, they are authorized to auction the property to collect the delinquent back taxes. This is a public auction, and the property is sold to the highest bidder at a tax defaulted auction, sometimes called a delinquent tax sale.
The county does not want the property, they want the revenue that the property is supposed to remit which they use to pay county employees and many other bills.
If you’re attending your first delinquent tax sale, it may take place on the courthouse steps; it may take place online, or it may take place at a commercial bidding site.
Newcomers continually ask, are online purchases possible? The answer is yes. The county treasurer makes the decision on how they will conduct the delinquent tax sale, and it could be online.
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Do Your Homework Before Buying Tax Delinquent Property
Research is required so the bidder understands what they’re purchasing. For example, research the physical condition of the property and the records to locate defects in the title report.
Auction procedures can be slightly different from county to county. For example, at a tax defaulted property auction, the mortgage and deed of trust loan are extinguished, in other words, deleted, by the tax collector.
Be Aware of Other Liens on the Property
However, other liens, such as government liens, may remain on the property and should be researched, or they will become the buyer’s responsibility.
Be Prepared for Quitclaim Deeds Being Issued at County Auctions
At the auction, the county will issue a quitclaim deed. Regardless of whether it says treasurer’s deed or tax collector’s deed, the narrative on the deed will explain that it is a quitclaim deed.
I am not an attorney, and you should have this explained to you by an attorney. A quitclaim deed simply means that the county is not responsible for the property’s condition and takes no responsibility for any defects in the title.
Know the County Auction Rules
Delinquent tax sales require the bidder to pay for the property within hours, sometimes immediately. This process is always listed in the auction rules. Auctioneers are not flexible and will follow the rules.
Many questions are answered by reading the auction rules and county websites. Do your homework, and know the rules.
Physically Inspect Tax Delinquent Homes for Sale
As an investor, I would recommend a physical inspection of the property. When you purchase, the sale is final. There are no refunds. If you’re buying online, you may or may not be aware of a recent hurricane, fire, or flood, or if the property is in an appealing location or not.
Auctions are a serious matter. Most county delinquent tax sale auctions will not allow bidders inside the property. The decision must be made by inspecting the outside of the property only.
Tax defaulted properties require the bidder to understand the warning Buyer Beware.
Many properties at delinquent tax sales are used and abused. Some are junk, and some only need a light clean up.
Earn Massive Profits from Tax Deed Investing
Why would someone attend a county delinquent tax sale? The answer is – money. If the bidder can purchase at a low enough price, has looked at the property and determined they can sell it at a higher price with a significant enough margin, that is the reason for attending an auction.
If you can buy property for 10 or 20 cents on the dollar and sell it for 50 or 60 cents on the dollar, you’ve got yourself a lucrative investment.
We hope you enjoyed Ted’s lesson, “Attending Your First Delinquent Tax Sale”
At a delinquent tax sale, you can pick up mortgage-free real estate for 10, 20 or 30 cents of the dollar, however, you must do your due diligence before bidding. You are purchasing real estate as-is, and the county will not be liable for any defects to the property or the property’s title.
Be sure to do your research beforehand. If you don’t know how, Ted can show you. Once you understand auction rules and how to choose properties that are winners and resell them, you can earn massive profits.
If you’d like to know more about delinquent tax sale property investing, Ted Thomas provides full support and complete training with home study courses, Q&A webinars, live tutorials, workshops, web classes, and personal coaching with certified coaches.
Learn how to reap huge rewards from tax lien and tax deed investing! Get started today by taking advantage of Ted’s Free Master Class! Act now, it costs you nothing and will give you a big head start!
Ted Thomas is America’s Leading Authority on Tax Lien Certificates and Tax Deed Auctions, as well as a publisher and author of more than 30 books. His guidebooks on Real Estate have sold in four corners of the world. He has been teaching people just like you for over 30 years how to buy houses in good neighborhoods for pennies on the dollar. He teaches how to create wealth with minimum risk and easy-to-learn methods.
Ted Thomas is not an attorney or a real estate broker.