does any one know if buying houses on tax sales works, ie liens?

Question

the gov siezes property until the tax gets paid, if you are willing to pay the overdue taxes, you can own the house

Answer 1

In therory yes, but here is what really goes on:

Governments and Municipalities are in the business of running governments and municipalities, not collecting on bad debt. Often times your state/county/town has spent the tax revenue long before the monies are even collected.

Somewhere, someone came up with the idea of the tax lien. If you fall behind on your property taxes the town sells that lein off to an investor who is guaranteed either a very high rate of return (some towns allow as much as 25% interest) or if the lein goes unpaid the lein holder can forclose and assume oewnership of the property.

Now remember I opened by saing, "In theory." This type of deal, tax lein auctions, have become so lucrative and popular that entire company 401K's and investment portfolios are heavily invested in them. When you go to one of these auctions there are guys there buying 100's of thousands of dollard worth of leins. The bidding is furious!

So let's assume you are lucky enough to buy a few, and there are private investors who do. If the tax lein isn't paid by the property owner the banks usually step in and pay them off. They aren't going to get in line behind you who ownes maybe a $3,000 lein. They want to stay in first position. You still make out though.

If you are able to buy a lein and ultimately assume ownership of the property it's probably not going to be a peice of property you want to own anyway.

One VERY important thing to remember: If you do take pwnership of a property as result of a tax lein, you also take ownership of every problem assiciated with that property as well.

There are people out there making a killing on these deals but it's not for the faint-of-heart. If you plan on investing your hard-earned money into this venture, consider investing some of it into a good tax lawyer or a firm that does this kind of thing for a living. Don't go in blind. You WILL lose everything.

Good Luck!

Answer 2

I think you are talking about tax deeds. Tax liens become tax deeds once the original property owner doesn't pay for it. The converted deed goes to the investor that kept the lien.

Tax deeds are a bit tricky because you actually own the property rather than just get interest from late taxes (tax liens). You need to know the tools online and with your county to look up encumbances, outstanding tax liabilities, IRS issues, etc. To type it all up in this small space and time would take a few hours. I'm going to refer you to two things, a web site and also a book.

1. The web site for proper tax deed research is:
www.investingwithoutlosing.com. It contains not only
auctions that's going to happen but also tips and
tricks.

2. The book I'm going to recommend to you which I found
to be the best in tax deeds is: Complete Guide to Real
Estate Tax Liens and Foreclosure Deeds: Learn in 7
Days [ISBN 0978834682] by Sausa.

If you have the opportunity, I highly suggest knowing
the tax lien auction process first before jumping into
tax deeds, since there is less liability in tax liens
and in some cases, you get more money. But everything
depends on what you're trying to do as a goal,
whether you want to invest in tax deeds to have a
portfolio of land for long term or whether you want to
flip it.

Have a great one!

Also if you wanted to see local tax deeds or tax lien sales in your area, you can visit this free site that I always use:

http://www.InvestingWithoutLosing.com

Answer 3

There are very, very few areas in this country where you can actually get a house in a tax sale.... usually, there is just a lien on the house until it is sold, or the overdue tax is sold to a collector, and then the collector tries to collect-- but has NO right to the property.

Answer 4

Only a few areas where it DOES work this way and you can bet every one in those area scrutinizes the tax records hourly!

There are redemption periods to be dealt with though.

Added
Others keep talking about tax liens and I think you are talking about the process of walking in and paying the tax and walk out owning the property. THIS is absolutely possible in a very few areas. No liens no nothing YOU end up with the deed to the home.

Answer 5

Yes it does work but you had better do your homework. The taxes may not be the only thing that you are buying with the house. You may also have a mortgage or other liens that were placed against the property.

Answer 6

That may have been the case 25 years ago. However, today the county sells those same property for fair market value. You may be able to get a low offer in on some property but your still probably going to have to pay upwards of 80% of market value.

And if you win you have to give the County within a couple of hours of you winning the bid, to deliver a Cashier's check for 10% down.