I have a plan...
Chances are, you've heard about buying properties and houses for cheap, cheap, cheap at tax sales. As far as I know, every county in the United States has some sort of property tax sale every year, and my county is no exception.
Here's a little more about buying a house at a tax sale.
As I mentioned above, every county has a tax sale, which are usually auctions. The properties and houses at these tax sales are being sold because their owners were unable or unwilling to pay their property taxes. That's bad for them and great for anyone that wants to buy a house cheap. The county wants to recover their money somehow, so they offer properties and houses to the public for very little money - usually in the form of an auction. Typically, the starting bid on a piece of property or a house starts at the amount of back taxes plus any fees.
In my county, there are three tax auctions each year.
Upset Sale
The Upset Sale* is the first of the three tax sales in my county. The minimum bids on properties in these types of sales typically start at the amount of any back taxes plus some fees. In my county, this means that some properties start with a minimum bid of less than $1,000.
Houses and properties in these auctions, however, are not without possible problems. Before bidding on these properties, you need to do a little homework.
First, you need to find out if there are any liens or judgments against the property owners or the property itself. If there are and you buy that property, there's a good chance that you'll be responsible for these. Meaning that you'll most likely have to pay big bucks to either pay off a lien holder or judgment, or a lawyer to get out of it. So, make sure you do a thorough title search on the property before bidding. I'll get into this more in my next post.
Second, you have to check out the property on paper. Your local assessment (or similar) office should have most of what you're looking for. The nice ladies and gentlemen at this office can usually help you find a parcel number for the property you're looking at and pull it up on a computer. You'll be able to find out the estimated value of the property, how many buildings are on it, how large it is, where it is, and where its boundaries lie, along with a bundle of other information. I found a neat website called Property Shark where I can do a quick preliminary search before I hit the assessment office. I'm sure its not 100% accurate, but it seems to be pretty close.
Finally, you need to check out the property...in real life. This is where it gets tricky. Okay, it gets downright difficult. When looking at buying a property at a tax sale, there's a little catch - you aren't allowed to set foot on that property. If you do, you could get charged with trespassing. So, you need to get as close as possible to the property - legally - to see what type of condition it's in. If necessary, buy a good pair of binnoculars...
Judicial Sale
"What happens if a property doesn't sell at an Upset Sale?" you ask...
It gets put on the list for whats known as a Judicial Sale. In my county - as with many other counties - if a property doesn't sell at the upset sale and the property owners don't pay the back taxes before a certain time, it gets put up for auction at a second tax sale, a Judicial Sale.
Properties and houses in this sale are usually free and clear of any liens and judgments and other bad stuff. But, don't let that stop you from doing your homework anyway! The minimum bids on these properties also usually start at the cost of fees and court costs. In my county, that can mean the minimum bid on a property might be as little as a few hundred bucks. Of course, with a free and clear deed and a price that low, get ready for some crazy bidding!
Repository Sale
"What happens if a property doesn't sell at a Judicial Sale?"
It usually goes on another list to be sold in another sale - a Repository Sale in my county. This list consists of all the leftover properties that didn't sell the first two times around. Hours in front of Google Maps satellite view, two days of driving around, and $50 in gas after receiving this list, I finally figured out why they didn't sell.... No one wants them - and for good reason.
Most of the properties on this list are pretty well junk. They're usually something like empty lots or dilapidated mobile homes and houses. However, I got ahold of this list pretty late in the game, so there might be some good stuff on it right after the Judicial Sale. And, from what I understand from my "inside source" at the county courthouse, they'll accept just about anything we bid and bidding starts at $50 to $250 here, depending on the property. Not a bad way to score a few acres for a future building site.
So, there's my rundown on tax sales, at lest in my area. If you haven't figured out what my plan is by now...well, I don't know what to tell you.
How is dropping a couple grand going to save me money? Simple - no more rent!!! We pay over $500 in rent each month. I figured out that T and I have spent about $20,000 in rent during the past three years alone. In my area, that's the price of a small, yet livable and decent, house or piece of land.
In the next few weeks, I'll be adding more about tax sales, and I'll even try to take you along on my first tax auction. Fun, fun!! Here are a few ideas for future posts:
- How to Find Properties For Sale on Back Taxes
- How to do a Title Search
- What to Look For in a Property For Sale on Back Taxes
- How to Find the Best Properties at a Tax Sale
- Buying Property at a Tax Sale: Should You Feel Bad?
If there's anyone out there with any experience in buying property on back taxes, feel free to comment with any tips or advice!
*Fun fact... According to the lady at the courthouse, Upset Sales are not so named because the owners are upset about their properties being on the auction block. They're called upset sales, because the minimum bids start at "upset prices", or the amount of any back taxes, etc, etc.
No comments:
Post a Comment