Buying A Home At A Tax Sale?

Question

I have a friend that is somewhat unreliable. He says that theres a house in my neighborhood that was foreclosed on due to unpaid taxes. The amount is only 600.00. He said we could buy it for the 600.00 but couldnt do anything with it for 3 years. Every year paying property taxes on it of about 300 a year. I told him homes like that usually go up on auction. He says it went on auction and no body purchased it. So its being sold as is for this amount. The land alone is worth 20k. I have a hard time beliving him. Could he be telling the truth? How does tax sales work? Is this plausible?

Answer 1

Varies from state to state, but the basic principle is that the buyer has to wait until the redemption period expires. Assuming that is 3 years, the owner whoever that is, has the right to come in, pay the unpaid taxes and get the house back. You have to pay the taxes, insure the place and keep the kids, bums and squatters out in the meantime. Also, you have no idea if the house is not up to code and would need $$$ to get a certificate of occupancy from the city. You would be prudent to get a house inspector in to tell you what kind of expenses await you if you get the house. The unpaid taxes may be the least of your worries.
All that said, there are people who buy homes at tax auction for a living, so there can be a lot of value as well.

Answer 2

Why did no one buy it at auction? What is wrong with it? Is title to the property bad? Is it on 3 mile Island? Is there a 5 ft gas line under the property? Is there oil in the house leaking? Is there a mortage on the property? Is there a sewer leak in the basement? Did termites eat the structure?

You get what you pay for? When you buy a house at tax sale you do not get to inspect it or go inside it.

A house is not foreclosed on due to unpaid taxes, only a mortgage company will foreclose due to unpaid loan payments, which they will then turn around and put the house up for sale (after they they pay the court to evict the now former owners). They also have to pay all the back taxes at that point too usually.

Check your local tax assessor and collectors office as to how a tax sale really does work, every state has it's own little differences and some people are protected based on age or disability.