How Does Tax Auction Translate Into Property Aquisition?
Hi everyone! We do most of our investing in the pre-foreclosure market, but noticed the tax auction notice on our local county website recently. How does the tax auction relate to gaining outright ownership of a property? Some of these auctions are in tax default only $70.00! Is this possible?!?! Gain ownership for that little? What am I still on the hook for? Paying balance of mortgage? Any other liens on property? Thanks for helping out a Tax Newbie!
Andy @ AxisInv
AxisInv---------------
There is no way to answer your question.
Every state has different statutes about the collection of delinquent property taxes. The procedures are all different.
Since you didn't indicate what state you are referring to, it is impossible to answer.
Good Investing***********Ron Starr***********
Like I said, Total Tax Newbie!!!! I am in Washington State and would love to figure the Tax auctions out. Any help would be much appreciated.
Thanks again!
Andy
AxisInv
I am a newbie in the tax lien/deed field, but i have been looking at this recently.
My understanding is that you pay the $70 or whatever and the homeowner has several years to pay that back (with interest and penalties going to you). If they don't pay it back, you can get the house.
I don't know if other liens/mortgages are wiped off. I also don't know if you are in a deed or lien state. Some investors invest out of their own state to get the higher yeilds. This guy has a website that might be helpful: www.professorprofits.com but I can't vouch for it.
Emily
AxisInv--(WA)-----------------
Washington is a deed state, you bid at the auction and get a deed to the property.
When the opening bid is as low as $70, such as you cite, there are a couple of things. One, the property may not be a usuable parcel. It may be, for instance one foot wide by 20 feet long, which I saw sell recently at an El Dorado County, CA, tax sale.
Another thing is that properties at low prices tend to be bid up a lot by the attendees.
I suggest you read the county treasurer's online descriptions of what happens at tax auctions. As I recall Watcom County has a good discussion. Also, be sure to check the King Co. site.
Also, read the state statutes related to the collection of delinquent property taxes.
Otherwise, it is pretty straightforward. There is an public open bid auction, where everybody bids as high as they like as the properties are brought up for sale one at a time. There is a deed issued. Then you do what you want to do with the property.
Where are you located? I bought a property once at Beaver in the Clallam County tax sale. Sold for about 10 times what I paid for it. I was a great location--fronted on highway 1 just one block from the tavern.
I still long to own a property in Sequim where I could have a summer home.
Good Investing**************Ron Starr********
Ron-
Thanks for the info! I will perform the necessary research before attempting a deal. I live near Mill Creek, North of Seattle, and my Grandparents originally migrated from Italy - to Sequim! There is even still a creek that bears the family name!
Andy
AxisInv
You will also likely find that most tax auctions are unimproved lots. The reason is that for any property with a loan against it , the lender will cure the tax default and file a notice of default on the loan leading to a foreclosure sale rather than a tax sale.
Also, very few l(percentage ) actually make it to sale. There are several counties that publish their tax auction results after the sale. Try a Google search on "Tax Sale".
Andy, If Washington is a tax DEED state there may be a right of redemption period. In Texas the owner of record may come back up to 180 days after the tax sale and repay the invester plus 25% and takes his land back. The only exception is on land that had an agg. or homestead exemption. In this case the owner of record pays all plus 25% if redeemed the first year and 50% if during the second year. Worst case it's a safe way to make 25-50% on your money in 6-24 months.
jigginadeal-------------------
No, there is no period of redemption after the tax deed is issued in Washington state. There is actually an action one year or more before the public bid auction that changes the ownership of the property. As I recall, there is a deed issued to the county. There is a one-year right of redemption after that period, but the public bid auction is conducted after the right of redemption has expired. Actually, I think perhaps the property can be redeemed up to the time of the auction.
Good Investing**********Ron Starr*********