How to Buy Property for Taxes Owed
When a homeowner can't pay his taxes (local or federal), the government has the full authority to take ownership of that property. Two tools the government uses to sell these properties are the tax lien certificate and the tax deed. Both are auctioned at local courthouses. The challenge for most people is finding information about the process in your local jurisdiction.
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Instructions
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Go online to the property tax office, county courthouse, or central appraisal office for your city or local government. You should be able to search by address location for the property in question. If not, your main goal is find information about the property, real estate agent, and bidding date for the property. You also want to find out if it is a tax lien or a tax deed sale.
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Go to bid4assets.com. This is a popular website is used by county clerks and tax collectors. They have a listing/database of the properties available in your jurisdiction.
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Understand the difference between a tax lien sale and tax lien certificate. Tax deed sales are when the state sells the actual property outright, whereas, tax lien certificate sales are when the state obtains the power to sell the property but does not own it. Instead, an investor can make the homeowner a loan in exchange for an interest in the property. If the owner defaults on the loan, the property goes to the investor.
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Inspect the property you are interested in before the auction. A picture is worth a thousand words, but not when it may costs you more than a thousand dollars. Ask neighbors about the homeowners or tenants if possible and familiarize yourself with the neighborhood.
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Place a bid. Each property has a starting bid which is a either a minimum dollar amount (tax deed) or maximum interest rate (tax lien). The auctioneer will ask for opening bids and those interested in the property will raise their bidding cards. The last bidder left standing is the winner.
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