How to Buy Tax Foreclosed Homes
When a homeowner does not pay local property taxes, the county government will put a tax lien on the property. At this point, the homeowner has a statutorily defined length of time in which to redeem the property by paying off the unpaid tax plus penalties and interest. If the homeowner fails to meet this deadline, the holder of the tax lien (either the county or a private investor) will foreclose. County governments normally auction these properties at tax deed sales, often at bargain prices.
Other People Are Reading
Instructions
-
-
1
Search for tax deed sales. The best way to do this is to subscribe to an online directory. Online tax deed sale directories contain basic information about tax deed sales throughout the United States.
-
2
Narrow your list of potential tax deed sales by contacting the county governments of the tax deed sales you found in the online directory for further information. Make sure you get a copy of the registration and bidding rules, the exact address of the tax deed sale, and detailed information about the properties for sale.
-
-
3
Register for the tax deed sale in accordance with the registration rules you obtained from the county government. Some jurisdictions will require you to pay a deposit.
-
4
Narrow the list of properties on which you intend to bid. In many cases, the tax deed sale administrator will provide you with the appraised value of the property for tax purposes. If the properties are located near your residence, check out the neighborhood and physically inspect the property (if possible). Enlist the help of a local real estate appraiser if possible, because county tax appraisals are not always accurate.
-
5
Perform a title search on the properties that are of most interest to you. If you discover any previously unknown liens or mortgages, or any competing claims to title, take this into consideration when estimating the underlying value of the property.
-
6
Determine your minimum and maximum bids for each property on which you want to bid. (The minimum bid will probably be the unpaid amount of the tax lien.)
-
7
Prepare certified funds in various denominations (or cash), because many counties will expect you to pay your bid in cash or certified funds at the tax deed sale. Others allow you a short period (24 hours, for example) to prepare the funds.
-
8
Attend the tax deed sale, bid on the properties that interest you, and pay any winning bids. The county government will issue you a quitclaim deed to the properties you purchase.
-
1
Tips & Warnings
Since many counties now offer online tax deed sales, there is no need to restrict yourself to tax deed sales in your area.
A house with a quitclaim deed is of dubious market value. You should file a "quiet title" action in the appropriate local court soon after obtaining title to the property in order to receive clear title.
