How to Buy a Tax Lien Foreclosure
Every property owner in the United States must pay property taxes on his home and any other real estate he owns. If the owner fails to pay taxes when due, the county can seize the property and sell it at auction to pay off the back taxes. The starting price at the auction is typically the amount of the tax bill plus any fees, interest and fines due. Since tax liability is usually a fraction of the property's valuation, tax lien auctions often start at a very low price. If only a few people bid on the property, it may sell for pennies on the dollar.
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Instructions
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Identify the county office responsible for administering tax lien foreclosures. Each county has its own procedures, but they are all required by law to publicly announce tax sales. Look in your local newspaper under public announcements for upcoming tax lien sales. The contact information for the agency in charge will be listed in the announcement.
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Contact the agency responsible for liquidating tax lien foreclosures. Ask for the date, time and location of the next auction and any registration requirements. Request a list of properties to be sold and the rules of the sale. Ask if the agency has any other information about the foreclosure and auction process that it can send to you.
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Review the list of properties and then visit and inspect each property that interests you. Do your due diligence to ensure that the property is in good condition and is worth the price of the tax lien. If the previous owners were evicted, you can contact the county and request permission to have an inspector evaluate the property. If the property is still occupied and you cannot inspect it, you might consider moving on to the next house on your list.
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Attend the tax lien auction. Come with a list of properties you want to bid on and determine in advance the maximum you are willing to pay. Do not bid more than your predetermined maximum bid. Tax lien auctions are held often, so there's no point in paying more than you should just to win the auction.
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Pay the county tax assessor for the deed to the property when you win the auction. Most counties require payment up front for the entire winning bid. Generally, you will need a cashier's check covering the total cost of the property. Once you've made the payment, you will be issued a deed to the property free and clear of any liens, mortgages or other encumbrances.
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