If you own real estate in the United States, chances are you will have to pay taxes of some sort on the estate. If a person fails to pay their taxes, the government takes over. They will put liens against the owners and eventually this leads to property tax sales.
If you own real estate in the United States, chances are you will have to pay taxes of some sort on the estate. Taxes of this kind usually go to helping the state pay for the infrastructure. This means roads, schools, hospitals, and so on. Without these taxes, the government would have to find other way to get the revenue. If a person fails to pay their taxes, that’s just what the government will do. They will put liens against the owners and eventually this leads to property tax sales.
Property tax sales generally come in two distinct varieties. The first of these is the lien auction. In this example, the house itself is not up for grabs. The people gather to bid on the debt itself. Why would anyone want to inherit debt, much less bid on it? Well, having ownership of a lien is a powerful thing. The winning bidder will have the right to penalty charges if and when the original owner pays off their delinquent taxes. The rate on these interest fees will usually be quite high, sometimes up into the 20-25 percent range. This can be extremely lucrative. Of course, if you’re dealing with someone who has already been extraordinarily delinquent on their taxes, there’s a decent chance they won’t be paying up. But then the owner has the right to foreclose on the property itself and sell it.
Property tax sales are sometimes for the deed itself. In this case the government has already foreclosed on the lien and is ready to go ahead and sell the property. This is again done in an auction based setting and it is a remarkable way to purchase a house for much less than the going market value. This is because the government is simply interested in recovering their back taxes and outstanding fees, both of which won’t amount to a small fraction of the house’s real value. Of course, the auction situation means the price will inflate beyond that, but it will never come near its actual market value, even in a recessed economy.
As you can probably see, property tax sales provide a good opportunity to make some serious money. People all over the country have realized that for themselves and are taking advantage of this system to make some money on the side, or even switch to making buying and selling houses at auction their full-time job. If you would like to do the same, find some auction listings, get some money together, and jump in.
