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There are a number of things to consider prior to placing a bid on a tax foreclosuresale. You must first be familiar with the condition of the foreclosed property.
So what exactly is a tax foreclosure? A tax foreclosure is when the homeowner fails to pay property taxes the state's tax laws are triggered to remedy the situation.
There are actually two processes the property lien can undergo and it depends on state law: the "tax lien" sale or a "tax deed" sale. It is essential for you be familiar with your state's tax laws before proceeding. With tax lien sales, the county is accountable for collecting taxes on the property, because the homeowner hasn't paid taxes himself. So the winning bidder is in fact paying for the tax liability on the property. After that, the homeowner pays back the bidder, which includes the tax amount, interest in fees. This occurs within a specified timeframe. If the homeowner then fails to pay, in many states, the lien holder receives the property deed as well. With the "tax deed" sale, the county immediately offers the deed of the property for payment of the tax lien to a third party.
To assist you in finding such opportunities, here are some of the top tips in searching for tax foreclosures:
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There are a lot of sources available when seeking information on tax foreclosure properties. Many websites offer helpful assistance in finding details. These foreclosed properties are also part of the public record, so be sure to check your local courthouse and your newspaper as well. These are the best places to start when looking for tax foreclosure opportunities.
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Visit the County Clerk's office where the property is on record. Ask for a book called the "Registry of Impending Foreclosure Sales." As mentioned above, here you can find a lot of information on tax foreclosures.
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Be familiar with the property you are considering. Is the property vacant or are the tenants still residing there? It may be difficult, expensive, and/or time-consuming to evict residents from the property.
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Take a look at the tax foreclosure property you are interested in. Try to investigate the condition of the property—inside and out, if possible. If you can take a look inside the property, you should hire an inspector to come along and evaluate the condition of the property.
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If you're the winning bidder, keep in mind that you must make a down payment immediately and then pay the remaining balance by the end of the business day in most cases. Payment is to be made in cash or by check. In some instances, you may be able to obtain a mortgage at the auction site if there are lenders there to help you.
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Homeowners may pay their overdue taxes anytime prior to the day of the auction. If the taxes are paid in time, the property will not be auctioned.
Additionally, be sure to have a good knowledge of the rules and regulations regarding tax foreclosures prior to purchasing the property. The guidelines may also differ from state to state and from county to county, so keep this in mind. When you come across a property you are interested in make sure to thoroughly investigate the property and follow the steps mentioned above to ensure a smooth transaction and to secure your investment.
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