An Explanation Of Real Estate Tax Sales

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As a homeowner, you have an obligation to pay your property taxes.  If you fail to do so, the tax authority can take action against you.  This action usually comes in the form of a property tax sale.  There are two sorts of property tax sales.

In a tax lien sale, the tax authority, usually the county, offers its right to the tax lien on the property for sale.  The buyer of the lien may then exercise the lien in order to profit from it.

In a tax deed sale, the county offers full ownership of the property itself for sale.

When you bid on a tax lien sale, you are bidding on the tax debt.  You are not going to come away from a tax lien sale owning a property.  In fact, you will be paying off the owner’s tax debt in exchange for first lien position on the title.  The homeowner now owes you ahead of mortgage lenders, deeds of trust or anyone with a claim against the property, with the exception of the state.  These sales are held at public auction, with the highest bidder winning the tax lien.  To verify this position, the buyer receives a tax lien certificate.

Now, when the delinquent homeowner pays off their tax lien debt to the buyer, the buyer can consider an interest penalty of from sixteen to twenty-four percent.  This is where buying tax liens becomes quite profitable.  If the tax lien debt is not paid back to buyer in full, plus interest, by a designated time, the buyer has the right to foreclose and acquire the property.

At a tax deed sale, you are purchasing the property itself.  If you are the highest bidder, you win the property and the right to take possession without any mortgages, deeds of trust, liens, or any obligation whatsoever attached to the real estate property.  Properties at such auctions are usually sold for taxes owed, plus any fees and court costs, etc.  They are generally very good real estate deals to make.

In order to find out where and when tax lien and tax deed sales are taking place, it is probably best to contact the county government offices or check on their website.

Before you purchase a property, be sure to review it thoroughly.  Visit the property before the sale and attempt to determine its value.  You want to safeguard yourself against risk as much as is possible.  You know what they say about buying a pig in a poke.

If you scratch the lucrative surface of property tax sales, you will find many attractive bargains.


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