Tax Title Basics To Know Before You Bid on a Property

Aug 30


Antoinette Ayana

Antoinette Ayana

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If you want to get a great deal on a house, you may be thinking about tax title properties. As long as you get an idea of how the process works, and then hire an expert for help, you may be happy with the purchase.

If you are looking for an inexpensive home or an investment property,Tax Title Basics To Know Before You Bid on a Property Articles you can check out tax title houses. This term describes homes that have been put up for auction after foreclosure, usually due to non-payment of various bills, such as taxes or utilities. The municipality will either sell it at a foreclosure auction or they will make a list of available properties for purchase. While you can get a good deal on this type of real estate, you should talk to a professional, such as a realtor or an attorney, before you buy since many tax title homes come with a few legal issues. 
In most cases, you can expect this kind of property to be similar to the typical foreclosed home. Such houses are usually sold as-is, and you do not know the condition before you buy, which means you are taking a risk. For this reason, this type of property is usually best sold to people who have experience fixing up damaged homes, or can afford to spend some money getting this done. In addition, you should have some money set aside in case there are any legal encumbrances associated with the home. 
Most tax title properties differ little from foreclosed homes because usually the owners were in a financial crisis and failed to pay more than just the mortgage. For example, they may have skipped paying their property taxes, which is a valid reason for foreclosure, even though they are usually given several years to pay. They may have also avoided paying utilities, which means that the new owner would be responsible for paying past bills in order to remove the lien and take possession. Not every house of this type has such issues related to it, but vast majorities have past owners who owe money to others who have placed liens on the property.  Because the original owners found themselves with an overwhelming financial burden, they've walked away from the property.  This is why you need to do a search on the house to find out which liens have been placed against it, and that there are even utility companies in the area that serve the lot. Once the home is yours, so are its original problems.   
If you have done a search and see no reason not to buy a tax title property that you like, your next step is to submit an application and the required fee. Most counties have a council that meets a few times per year just to handle the tax title properties in the area. If they decide to keep the house you want, your deposit will be returned, otherwise they will draft a contract if they decide to sell the residence. Once they agree to sell it, they will schedule an auction and notify you, and you can bid on it then. Most sales of this type take at least six months to complete, so expect to wait this long. 
Clearly, the process is complex, and you might not get the house you want. You may end up not even wanting it when you do get it after the auction. However, as long as you are prepared to clean it up and deal with possible legal issues, you can get a great deal.