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Tax Lien Sales Can be Great Investments

By Edited Dec 31, 2013 0 0

The economic crisis that has hit the real estate market has come forward with a lot of properties that have tax lien certificates placed on them. Tax lien investing is an opportunity that many Americans are taking advantage of in our current economy. Lots of real estate investors or would be investors have started a search for tax lien sales nationwide. Tax lien sales can be great investments for a number of reasons.

Tax deeds to real estate are sold in every state in our nation. Thousands of dollars can actually be made by savvy investors through tax lien sales investments with foreclosure properties.

Every homeowner has the responsibility to pay some kind of real estate tax for their property to the government. When a home owner fails to meet their real estate tax responsibility, the county will put the real estate up for sale at auction. The county is offering the real estate for sale to recoup monies lost through tax income they would have otherwise collected with the owner complying with the tax due for the property. The county holds these sales to recoup their monies which can be great investments for many investors.

Property can be purchased for a fraction of the actual value

When a tax lien sale takes place a piece of real estate or property will typically be sold for the back tax amount along with any extra fees such as court costs and interest due instead of what the real estate market value. Property taxes are generally an extremely small amount of the real market value of the real estate for sale. This makes purchasing property through tax lien sales or tax property sales particularly attractive for investors since they can get ownership of the property by buying a tax deed at a fraction of what the property is actually valued at.

Competition is generally low

Real estate tax lien sales must be announced to the public by law. At the sale the highest bidder will get ownership of the real estate property. The winning bidder will buy the deed to the real estate property and own it free of any mortgages or liens.

The completion for many of these sales is generally low. Although investors are purchasing real estate for a fraction of the value, winning bids must be paid in full immediately. Payment is due immediately for the winning bid amount via a cashier’s check for the back tax and all the extra fees mentioned.

A great number of investors have already reviewed the properties they have an interest in and only bid on that particular property. Therefore, there are a number of properties that don’t have any bidders or let investors that have the funds to walk away with real estate for pennies on the dollar since they may find they are the only bidders for the property in some smaller communities.

Investigate any tax lien sale property beforehand

When considering any investment in a tax property sale make certain the real estate property is thoroughly investigated. Although investors get the ownership to a piece of real estate free and clear the property should be examined for defects and other imperfections to lower the risks of investing in real estate tax lien sales. It is particularly important that all property purchased at a sale is examined before a tax lien purchase. For this reason online tax lien sales where a property cannot be physically examined are not particularly a great investment risk.

Find out where tax lien sales are held

In order to find specific dates and times of sales in a specific county or area the county tax recorder office should be contacted. Many county offices will post the dates and times of sales in the local area newspaper. There are also foreclosure websites that have gathered the information in an online data base that is composed of foreclosures, preforeclosures, FSBOs and tax lien listings in one place.

Opponents of real estate tax lien sales

Opponents of these types of sales point out that an increase in tax lien sales means an increase in the number of people who are losing their homes which is never a good thing. Additionally, when homeowners or property owners are unable to pay property taxes on time community services suffer. Property taxes are used to fund local community school districts, fire departments and fund street or government building repairs that everyone in the community uses and is hurt by any delays in their funding.

One major concern that many tax deed sale adversaries have identified is a number of banks are actually purchasing tax deed properties. Some have been identified in communities and the practice stopped. However, this is a questionable practice for a lot of people in the community. The same banks that have made it difficult for property owners to pay their mortgages and taxes to stay in their homes are purchasing back the same homes they may have foreclosed on.

Tax deed sales or real estate tax lien sales can be a tremendous investment for a number of reasons. However, before getting a winning bid for a piece of real estate make certain you investigate it to reduce the risks involved. 



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