Investing in Tax Deed Sales
Tax deed sales are a great real estate investing method for anybody to
get started in the real estate industry. The main advantage is that you
buy the homes at a discounted price, and then resell them or rent them
to the public for a profit. Likewise, if you are buying a home to live
in, tax deed sales offer great properties at low prices. You can
bid on one of the tax deed sales and turn it into your primary residence.
However, many people are avoiding tax deed sales as they are not
familiar with the details that go along with them. In actual fact, tax
deed sales are not too difficult to understand.
What is Tax Deed Sales?
The basic definition of tax deed sales is a home being forced sale by
governmental agency, Tax Collector’s office, to collect delinquent real
estate taxes because the home owner failed to pay his/her taxes.
Usually, each home owner is given a notice that states how much money
they owe, how long is overdue and a specific period of time in which
they can pay their taxes. Should the property owner decide to ignore
these requests and miss the time frame; their taxes are then considered
to be delinquent. In a nutshell, the home that is sold at public auction
by Tax Collector’s office to collect delinquent real estate taxes is
known as tax deed sales.
Downfalls of Tax Deed Sales
It is important to remember that tax deed sales are not as easy as they
may seem. Before you start buying tax deed sales, you will need to know
about the downfalls that are involved.
Keep in mind that not all tax deed sales are always valuable; quite
often they are not worth much at all. Typically, valuable properties
have a mortgage on them that would be canceled out at a tax sale. In
this case, the mortgage company usually chooses to pay the taxes
themselves in order to recover its losses. Subsequently, they will own
the property and it is no longer for sale at auction.
In some other cases, a valuable profit that does not have a mortgage on
it will reach tax deed sale status; you may not believe that there are
some rich people that simply do not pay their taxes. You may think that
you are going to buy these tax deed sales and make a large profit.
Unfortunately, the only problem with this is that you will be competing
against many other investors. If you do not have enough money, the bids
will soon go out of your reach and you will be left with the lesser
Tax Deed Auction
If you are interested in buying tax deed sales, you need to know the
First of all, there is no pre-registration required in order to
participate in the public auction. However, you or a representative must
be physically present at the sale to bid on the tax deed sales property.
You are advised to research the properties before you bid. It is
important to understand what you are purchasing at the sale and whether
there may be any liens remaining on the property. Remember; tax Deed
sales are not for the uninformed.
The minimum bid that you can place is usually the amount of the back
taxes plus any interest that has accrued, as well as any fees that go
along with selling a home. Never bid more than you can afford as this is
going to cause you problems down the road. If you are lucky enough to
win a property at a tax deed auction, you will be required to post a
small (about $200.00) non-refundable deposit at the conclusion of the
bidding for the parcel on the spot. Most tax deed auctions require you
to pay via cash, cashier’s check, certified bank check, or money order.
You will not be able to pay with a personal check or a credit card.
But if nobody takes advantage of the public auction bidding process; in
other words, bidding has ended, the property will revert back to the
government agency’s "Lands Available for Taxes" list. The County may at
any time within the first 90 days from the day the property is placed on
the list, purchase the property for the opening base bid. And after the
90 day period is over, the property can then be sold to any public
members for the base bid, accrued interest, and any taxes due, plus
documentary stamps, recording and indexing fees.
In summary, tax deed sales offer great deals to the public and any
investor. If you are interested in these tax deed sales, keep your eyes
open and then make your move.