Buying Properties That Are Up For Taxes
I am looking into buying houses that are up for taxes. Is this also called free and clear? And what do I have to be careful of before buying (like liens on the property etc.). And are the current home owners still responsible to pay their mortgage to the bank or the state or anyone. I would like to give them the option of buying their house back if I can buy the property cheap enough.
Thank you,
Tiffany
I am not an expert on this subject, but I will tell you what I know. Each state has different programs regarding taxes. From what I have been told, the properties are "free and clear", however you might want to check the county records to verify. You can also check with your county or state trustee for information, which they can mail to you. Hope this helps...
As noted it varies by state.
Many states sell a lien. You are not buying a deed, just a lien that needs to be paid. In some states such liens can convert into a share of the property. It will not be 100% of the property in some very specific states.
One state at least will never let a lien convert into a deed. When it come times the lien can force a tax deed sale where the property is sold of and the lien holder get they lien paid (with interest).
So, make sure you know the rules for the state and the county. Figure out just when a property that has a lien can be taken over if ever. There can also be a redemption period for a tax deed sale. This is when the owner can come back and pay what is owned (including interest and fees) to get the title cleared up.
You can earn good money on the liens. You can also own a lien on a swamp or otherwise completely worthless piece of land. These liens will not get redeemed.
Tax deeds normally sell for a much larger percentage of the value then a lien would ever sell for. This makes sense as you are bidding on the title of the property. Still you might not get the property if it is redeemed. Other folks make good money on tax deed sales.
In both cases the people who make the money normally are doing some decent amount of homework or are willing to just write off mistakes when using a shot gun approach to bidding.
If you want liens and you want the interest rather then the property focus on improved properties with residential housing and an existing mortgage. The lender will pay you off if the owner does not before the title is lost.
John
[addsig]
Tiffany,
The 'free and clear' sale is in april or may and is referred to as the Judicial Sale. Another Sale usually in September is the Upset sale. If you purchase property at the upset sale you will be responsible for any liens or mortages on the property. You must also consider that the owners can appeal the sale which you will be responsible to legally defend in court. Not to mention the costs involved with eviction. The Upset sale is not a great place to buy property due to the extensive research of the properties title. The Judicial sale is the better place to buy. Research, Research....find a real estate attorney and develop a strong relationship. Make sure you have enough capital !!! Best of Luck