How to Buy Property at Government Foreclosure Tax Sales

Tax foreclosure properties are sold at county public auctions.

Every year millions of homes are foreclosed either because of a delinquent mortgage or unpaid taxes. RealtyTrac reports that foreclosure notices were filed on 313,841 properties in June 2010 (Reference 1). When a property owner neglects to pay his property taxes, the government will conduct an auction to sell it to the highest bidder by either a tax lien sale or tax deed sale. Buying government tax foreclosures can be profitable to investors because these properties are typically sold below market value (Reference 2).

Things You'll Need

• Certified funds
• Internet

Instructions

1. Make a decision on which type of tax foreclosure you want to purchase: tax lien (tax certificate) properties or tax deeds. With a tax lien, you do not actually purchase the deed to the property, but once you pay the delinquent taxes, you become the first lien holder on the property. If the delinquent property owner pays the taxes, then he will pay you the late taxes plus interest. However, if the property owner does not pay the taxes, then you will own the property. If you purchase tax deeds, then you will actually purchase the deed to the property and own it free and clear from any liens. Both sales are held by the county at a public auction (Reference 2).

2. Call or visit the County Treasurer website where the tax foreclosure properties are located to get more information on the time, date and instructions for the sale. Each county has its own rules regarding its tax auctions. This department retains records on delinquent property taxes and information about tax auctions. You may have to sign disclosures or register before you attend the sale, so it is best to contact the county treasurer department in advance to prepare for the auction (Reference 3).

3. Research the properties. Many counties list the properties that will be available for auction on its website or call the county treasurer department to request a list to be faxed or mailed to you. If the report contains the property address, then drive by the home and inspect the exterior with a handyman, looking for any major defects, such as leaks in the roof or cracks in the foundation. Also, drive around the neighborhood to decide if you want to invest in the area (Reference 3).

4. Get certified funds. Many property tax auctions require you to have your funds certified with either a money order or a cashier's check to make purchases. If the auction rules require certified funds, make sure your check is enough to cover the amount of the properties you want to purchase. If your check amount is over the price of your accepted bids, then you will be refunded the difference (Reference 4).

5. While at the auction, listen closely to instructions and ask officials for assistance if you do not understand the rules or have questions.

6. Place bids on the tax foreclosures you want to purchase. If your bids are accepted, officials at the auction will give you further instructions about taking ownership of your property.

Tips & Warnings

• Consult with a real estate attorney to get additional advice about purchasing tax lien or tax deed properties.

References

• RealtyTrac: 1.65 Million Properties Receive Foreclosure Filings in First Half of 2010
• Foreclosure.com: Tax Sales
• Albany County: Division of Finance. Real Property Auction
• Weber County Government: Delinquent Tax Sale Information