Today I’m answering your questions about buying homes for back taxes, and the topics I’m going to cover are:
- Buying a House by Paying the Unpaid Taxes
- Is It Risky to Buy Tax Lien Property?
- How to Find a Tax Sale
- Researching Tax Delinquent Property
- Attending the County Auction
- Being Ready to Buy After the Tax Auction
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Buying a House by Paying the Unpaid Taxes
Local governments around the nation depend on property taxes to raise money. When these taxes are not paid, the governments can put a lien on the property. This means you get the chance at buying homes for back taxes.
Before you decide to rush out and start buying homes for back taxes, there are some things you need to know.
Is It Risky to Buy Tax Lien Property?
Yes, there is some risk; financial investing always carries risk. But this is very small. More than 95 percent of the time, past-due taxes are paid. You get your initial investment back plus interest. The interest is usually well around the bank rate and often more than a market return.
If the taxes are not repaid, you then can foreclose on the property. You end up owning real estate free and clear, for pennies on the dollar. You can turn this around and sell it for a profit.
Next-door neighbors are often interested in buying the property, especially if they can get it below market value. Keep in mind you can still make a healthy profit.
How to Find a Tax Sale
Most of the time tax lien and tax foreclosure sales are listed in the community newspaper. The local courthouse or city hall will also have a list of homes being sold for back taxes. The great majority of these government sales can be found online.
Some states have created a single website for all legal notices across the state. Selling homes for back taxes is a big business after all.
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Researching Tax Delinquent Property
When you’re buying homes for back taxes, prior to the auction, if at all possible, go look at the property in person. Second-best is to have someone you know and trust go view the real estate on your behalf. The third choice is to look at the property online.
Google Earth and other satellite image programs can let you see the property from a bird’s eye view at least. In cities and well-developed neighborhoods, street views are also possible. This gives you an idea of the condition of the home and the area.
Check with real estate companies’ online listings to see what similar homes are selling for in that neighborhood. Zillow is a good resource for sales because it posts all sales, not just one Realtor’s listings.
Some liens and mortgages may be set aside when selling homes for back taxes.
The local tax authority should have additional lien information. A title check may be bought from companies that offer this service.
Attending the County Auction
This is a key part, of course. If you are not at the auction, virtually or in person, you can’t bid. When selling homes for back taxes, the local government won’t wait for people to show up. The auction starts and properties sell regardless of who is there or not there.
Some auctions allow people to bid online. Some require a physical presence. This varies by community and state. Some communities require registration and a deposit. Some do not. Check with the tax office to see what the process for buying homes for back taxes is.
Being Ready to Buy After the Tax Auction
In-person auctions require the buyer to have money by the end of the auction. Online sales have a short period of time in which to get the purchase price to the taxing authority. In either case, know how much you’re going to spend buying homes for back taxes and have that money ready.
Confirm well ahead of time what the payment process is. Some places take cash. Some require certified checks. Some allow credit or debit cards.
We hope you enjoyed Ted’s lesson on Buying Homes for Back Taxes.
You can purchase mortgage-free properties for just the back taxes. Just be sure to do your due diligence on the property before bidding and know and follow the auction rules.
Need to know more about buying homes for back taxes? 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.