Buying Homes Through Tax Lien Foreclosures

Tax lien foreclosures are properties that are scheduled for sale due to a homeowner's failure to pay off their property taxes or income taxes. Tax rules require homeowners to pay a certain amount a year, and if they fail to do so, their property can be foreclosed on and sold at auction. Buying property at these sales is a great way to save, since this property is so often sold for below its actual value.

How Does Tax Lien Foreclosure Works

Tax lien foreclosures follow basically the same procedural methods as would a foreclosure on a property for a mortgage default. Once a property is repossessed by the government, it is auctioned off to the public as a means of collecting the tax debt owed by the owned of the property. The amount of time it takes for the foreclosure to complete is dependent on individual state foreclosure law, but in general the property is sold relatively quickly, and often for anywhere from 30 to 50% off its actual value. Tax lien foreclosure and other sales on foreclosures are happening in greater number nationwide, and there is new sales spring up all the time.

The Growing Number of Foreclosure Homes

As a result of their growing numbers, tax lien foreclosures property is becoming more sought after by investors and homebuyers. Since there is so much property up for sale through this method, prices are falling on sales across the board.

Each bank or tax official has their own ways of handling the sale of tax lien auction or sale. It varies from person to person. The sale of Tax lien foreclosures properties are generally held at a courthouse or on the property that is being auctioned off. So there is no one set way that the sale of delinquent property is sold. The one constant is the fact that the person that the lien is being held on cannot buy his or her property back. That is the law. Not even family members can bid on the tax lien property. Again, this is strictly enforced by the law.

The Sale Process

Sales of property proceed in different ways in different locations, but in general a tax official will first determine that the property needs to be sold and go through the procedure necessary to repossess it. A tax lien auction of the property is then scheduled and usually held at the local courthouse. Anyone may bid on tax lien foreclosures property except the original owner, and the property is awarded to the highest bidder. After that, the winner of the tax lien property must arrange payment themselves or through a mortgage from a lender or bank.

An Excellent Tip to Homebuyers

For investors, buying a property through tax lien foreclosures can be very lucrative. Since property sold through foreclosures goes for a fraction of its actual market value, buying tax lien foreclosure provides not only great initial savings but also great potential profit as the property appreciates over time. Try searching for property at auction in your area and see what's available, as it can be your ticket to a great and valuable real estate purchase.