You may have heard how you can acquire property at a bargain price by purchasing it at a tax-sale. While this is true in some cases, there are laws that govern the sale of real estate when the owners are `in arrears in their property tax payments. Before you attend a tax sale and bid on a house, building or land, find out the sales terms and whether you can arrange for financing if you don't have sufficient cash on hand to pay the bid price.
Contact the treasurer's office in county in which the taxsale will take place. Upcoming sales are published as a matter of legal record in a newspaper one or more times before the sale takes place, but the publication may not identify the terms under which the property will sell and whether the original owner has the right of redemption. Failure to determine this before bidding may result ownership of a property that you may not sell, remodel or move into until a redemption period passes.
Make an appointment to examine the property, if possible. One of the reasons some real estate sells cheaply is because potential bidders may not view the inside of the structure before the sale. This is especially true if the tax-sale requires a bank foreclosure and the residents are still living in the structure. Typically, bidders who can view only the exterior of a property bid much lower because the interior may be badly damaged.
Call the county appraiser's office and ask what value the county holds for the home. While this is not fair market value, it may give you an idea of what the home would sell for later.
Arrange for financing before the tax-sale with your bank. Depending upon the regulations in your county, a letter of qualification from your bank, stating that you are approved to purchase the property up to a certain dollar amount, is required before you can bid. Other counties require a bank representative to be present during the auction and to write the check. If you have cash, you can bypass those steps.
Start the bid at the amount due in back taxes if there is a minimum bid on the property at a Tax-Sale. The auctioneer, usually a licensed real estate broker, will announce the terms of the auction before the bidding begins. In some jurisdictions, the property will not be sold for less than the amount of back taxes.
Take possession of the property if you're the high bidder. By law, the residents must vacate when the property is not subject to the redemption period and you have legally purchased it. The sheriff will accompany you and evict the residents--forcibly if necessary--or you can handle the process by yourself. You may decide to allow them a reasonable period to relocate.
Tips & Warnings
Talk to the neighbors who live next to the property being sold. Having lived there, they are a beneficial source of information on the former residents, and they may have knowledge of the home's interior.
• Property purchased at a tax sale may be redeemed if it falls under the statues of delinquent property taxes in your state. These properties often sell for much less than they are worth because the investor is taking the risk of tying up his money in the property, not being able to do anything with it and then having it redeemed in a few months or even a few years. Tax sale properties are "what you see is what you get" and you don't have the legal right (in most instances) to back out of a sale once you purchase the property, so make sure you bid accordingly if there are parts of the property you are unable to inspect before the sale.
Besides Tax-Sales where else can you Find Foreclosures?