Tax Sales
(An excerpt from 69
Ways To Make Money In Real Estate)
By Steve Gillman - 2005
You can get some cheap property at tax sales - in theory.
However, it can be difficult to get good information, not many
properties make it to a tax sale, and the sales are getting more
competitive.
Property tax sales are where the county or other government
body sells real estate for back taxes owed. These are properties
that have not had the property taxes paid on them for some time
- as much as three years in many states. The local taxing authority
can then sell the property to recover the taxes owed.
If tax liens on the property have been sold, then the lien
holder is the one that can take title to the property. Only if
the county doesn't sell liens, or if the liens on a particular
property aren't sold, does the property go to the tax sale.
There Aren't Many Tax Sales
Because tax lien investing is popular now, tax sales are relatively
rare. If the tax liens are sold, the lien holder will likely
take the property. If there is a loan on the property, the lender
will foreclose on the loan, take the property and pay the taxes.
If the owner of the property owes nothing on it, he would have
to be mentally challenged not to sell the property rather than
lose it over a tax debt of 15% of the value.
However, people do forget to pay their taxes on land that
they haven't even looked at for years. Banks may even forget
to foreclose and pay the taxes in time. For whatever reasons,
some properties do make it to the tax sale.
You will sometimes hear stories of people simply bidding the
amount necessary to cover the taxes owed, and getting the property.
Getting a $60,000 house for $2,100 makes for a good story - and
it is sometimes a true story. Don't count on it though.
The bottom line? If there are good properties regularly showing
up at tax sales in an area, there will be good investors regularly
showing up. You will not be buying properties for pennies on
the dollar. But you might still get a good price. Just be sure
to do your homework before the tax sale.
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