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Tax Sales

(An excerpt from 69 Ways To Make Money In Real Estate)

By - 2005

You can get some cheap property at tax sales - in theory. However, it can be difficult to get good information, not many properties make it to a tax sale, and the sales are getting more competitive.

Property tax sales are where the county or other government body sells real estate for back taxes owed. These are properties that have not had the property taxes paid on them for some time - as much as three years in many states. The local taxing authority can then sell the property to recover the taxes owed.

If tax liens on the property have been sold, then the lien holder is the one that can take title to the property. Only if the county doesn't sell liens, or if the liens on a particular property aren't sold, does the property go to the tax sale.

There Aren't Many Tax Sales

Because tax lien investing is popular now, tax sales are relatively rare. If the tax liens are sold, the lien holder will likely take the property. If there is a loan on the property, the lender will foreclose on the loan, take the property and pay the taxes. If the owner of the property owes nothing on it, he would have to be mentally challenged not to sell the property rather than lose it over a tax debt of 15% of the value.

However, people do forget to pay their taxes on land that they haven't even looked at for years. Banks may even forget to foreclose and pay the taxes in time. For whatever reasons, some properties do make it to the tax sale.

You will sometimes hear stories of people simply bidding the amount necessary to cover the taxes owed, and getting the property. Getting a $60,000 house for $2,100 makes for a good story - and it is sometimes a true story. Don't count on it though.

The bottom line? If there are good properties regularly showing up at tax sales in an area, there will be good investors regularly showing up. You will not be buying properties for pennies on the dollar. But you might still get a good price. Just be sure to do your homework before the tax sale.

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Houses Under Fifty Thousand | Tax Sales