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Is work keeping you from attending county tax sale auctions? Ever thought of buying tax lien certificates through the mail?
Yes, buying tax lien certificates through the mail is indeed possible and a lot of states in the US actually allow that. Why? These states permit this for tax liens that are considered to be left-overs and some states even give consent to mailed bids for their tax lien sales. Honestly, buying tax lien certificates through the mail do not pose a problem as long as you have already done proper due diligence on properties you want to place your bid onto. But you have to consider as well that it will be a big disadvantage when you have bid mailed for the county tax lien sales.
One suggestion, learn the procedures of the tax sales in the county you plan to purchase the tax liens. If your bid has been read out loud during the sale and those people at the auction sale have the chance to outbid you, this is not a good sign. It is always the investors present at the tax lien sale who will usually have the bigger advantage than you.
There are always a couple of states that allow for selling over-the-counter liens or assignment liens or commonly called as leftover liens via mail. Just always remember to be cautious though when doing due diligence on these properties, do it before you even place your bid! You have to realize that most of these properties have reasons why they were not bought by other investors at the tax sale. Thoroughly check the property before you decide to get it. With these in mind, buying tax lien certificates through the mail couldn’t be easier.
1. The County Recorder’s Office. This strategy may take a lot of your time but hard work pays off as this tends to be accurate. Each state in the U.S. has a place where public records are recorded such as wills, deeds, notices, mortgages, and even both state and federal tax liens.
Usually, there will be a computer on site which is advantageous so you can search across the records. Use keywords such as “tax lien” when doing your research and you will uncover a long list of properties that you can then pay to print out.
2. The Tax Collector’s Office. The tax collector often maintains a property list that are going into the tax deed sale as well as properties that the state is offering tax lien certificates against. Contact them to make sure they maintain such a list, and it isn´t held at the Sheriff´s office. You can also ask what the process is to get one of these lists. They may give you a hard time though but don’t worry too much about it. Just remind them that this information is a public record and you shouldn’t have problems thereafter.
3. Local Newspaper. During the sale procedure, the county gives “public notice” of all upcoming tax sales. Usually, they are given either before or after the classifieds. Do find time to go through this section. Take note of properties that you find interesting and do proper due diligence on them.
4. Subscription based list services. This strategy will cost you some cash but is considered to be a lot useful.
Planning to invest in foreclosed properties? Bank foreclosures such as a house, an apartment, a condominium, or any other bank foreclosures, there are reminders that you have to consider. Follow the reminders so that you can be sure that you will be earning large profits and of course, have your investment protected.
Before doing anything in a rush, make sure that you take time to research, investigate, and learn more about the foreclosed property, especially focusing on the condition and its history. You can also do a thorough research and ask about the condition of the house and its title to the property. The property’s age and location provide relevant answers to these questions. If it’s not too much of a hassle, you may also want to hire an inspector for an expert advice on the house’s condition. By doing proper research, your money won’t surely go to drain on renovations and repairs that are not entirely needed.
It would also prove to be helpful if you can spend a lot more time learning about the foreclosed house you are interested in bidding. Do research about its market value as well. Remember, in bidding, stick to your budget. Make sure you get a good deal. To do this, you should at least purchase a foreclosed house less than 50% of its market value. Remember, you may still have repairs and renovations to think about once you have the claim of the foreclosed house.
Before you purchase foreclosures owned by the bank, remember to always do researches on the market and the property that you plan in buying. Looking for help? Hire a real estate agent who is an expert in bank foreclosures to aid you in getting the best real estate property deals.
Usually, a lot of these residential properties which are foreclosed usually commonly require renovation or repairs. But remember, refurbishments will depend on the length of time it has been placed in the market. Know which houses are on sale too as soon as they become available. Learning more about the properties that you are interested in provides you more time to inspect and assess the renovations and repairs you may have to make.
Also, it is recommended to also know which foreclosures are being put on sale so that offers can be well prepared. With having a reliable relationship with your local estate brokers, especially those who have direct contacts with real estate specialized banks, can prove to be significant as they can also help you on your way towards making a great deal.
Now when it’s time to bid for a property, always ask the real estate agent to provide a comparative market analysis. This way, it will give purchasers time to scrutinize market prices and make reasonable comparisons of a particular property and of general market prices.
We all know about mortgages as these are the most common type of property liens. These are formal judgments placed on homes to limit what owners can do with it until the total mortgage tax debts are fully paid. You can sell a home that is mortgaged – as long as it has been fully before its title is reassigned to the new owner. Now if the owner neglected to pay the mortgage lender in accordance to the agreement, the lender may then utilize the lien to reclaim the house and sell it on an auction or to the auction market to recoup the losses. This is just one way you can earn profit with tax liens.
Now, let’s learn more about other property liens aside from mortgages:
Property Tax Lien
All of the properties in the United States are assessed for their value and are taxed on an evaluated worth to help the local government pay for their community services. When a taxpayer is not able to pay the taxes owed, the taxing authority will then have the legal right to place a lien on the property. The authority can then have the tax lien certificate sold at a public auction.
Businesses and house owners who hire contractors to handle the construction projects must be cautious that the general contractor pays all the subcontractors who worked on the project. When a subcontractor goes unpaid for his work, he can file a mechanic’s lien on the property so as to assure payment in the future.
Mechanic’s liens were constituted as a method to protect the laborers from losing income because of dishonest investors and contractors. Homeowners doing remodeling on their property need to be responsible with their payments.
Business and Finance Taxes
Business owners would certainly not want to miss out on payment responsibilities. To avoid such things to happen, it is significant to always choose a business and accounting firm that will suit your tax and accounting needs.
Ever wonder which are the best tax lien bidding tips? This article shows you exactly what you need to know and do during tax lien auction sales.
Bidding Down the Interest. This method is commonly used when buying tax lien certificates. With this method, different from the traditional process, it allows bidders to select how low the interest rate they’re willing to accept in purchasing the tax lien.
Profit margins are based on the interest which can be collected when the property owner buys the lien certificate again during grace period. Due to this, investors need to make sure not to bid too low that will eliminate any real profit.
Bidding Down the Ownership. Take Iowa for example, investors may be offered the chance to bid the ownership down when purchasing tax liens during auction. This is not actually the best method of bidding for many investors. As bidding gets lower, the investor will get less percentage of the profits and property which makes it the most unsuitable of all the bidding methods.
Through Random Selection. Some counties prefer random selection when selling tax liens as it is considered to be the cleanest method in offering investors the chance at the properties available for sale. In this method, every bidder is given a particular number and then a computer draws a number for every property that will be in auction. The first bidder number that has been drawn has the chance to accept or deny the price of the taxes due. If the bidder denies, the next number will then be chosen and so it continues.
Premium Bidding. Premium Bidding method is more related to the traditional auction. With this, the tax lien certificates are sold to the highest bid offering or the most premium over the lien amount. Some states or counties, however, don’t permit interest to accrue on “overage” but only to the original lien amount.
Through Purchasing Off The Shelf. There are certain areas where you can buy tax liens directly from the tax collector in a specific county. This happens often with tax liens that have already been auctioned but has not been bought yet. It is advisable to look into the property before buying.
Before you start spending more and more cash on notices and attorneys, you have to ask firmly, “Do I really want this property?” While you might think that your answer right now is yes obviously as you are getting it at just the taxes’ cost, you have to note that half of the tax liens that have not been redeemed are usually never taken to tax deeds. Why? Did the lien purchasers just forget about them? Well, possible some of them did but actually, most of the liens that were not able to go to deed is because their lien buyers simply realized that they did not want the property.
What are the common reasons lien buyers didn’t want the properties?
1.) They made a mistake on buying the tax lien in the first place. Now, they are regretting about this mistake and they are paying off for it by writing off a hundred percent of their investment. So always remember to do proper due diligence so this will not happen to you in the future.
2.) The property may have burned down.
3.) The property, usually commercial, may have gone through an environmental incident.
4.) The property may have been demolished by the taxing jurisdiction.
5.) The property you bought the tax lien for a year ago may have become a meeting place for trading, selling, or distributing controlled substances.
6.) A sinkhole may have grown and the said property was swallowed.
Some of the reasons above may be impossible for you, but do believe, these things can happen!
To get to the main point, just look on the property and think twice, “Do I really want this property?” before you spend your time and money on the tax lien for noticing, attorneys, title searches, etc.
Here are the answers of the 10 frequently asked questions about tax liens:
1. Who are able to buy tax lien certificates?
Anyone who is interested and who has the cash to pay the auctioneer can purchase tax liens.
2. When I buy a tax lien certificate, am I evicting someone from his or her house?
No, you’re not. You are only paying off the property owner’s delinquent taxes; you are not foreclosing on them.
3. Will I get to own the property in the future?
It is possible, though it is scarce that the owner of the property will forfeit their real estate. In Arizona, for example, 99% of all the property owners pay off their taxes owed to the county. The county then in turn pays you the interest plus a specific high rate of return. The property owner redeems 95% all over the country, tax lien certificates sold.
4. Why won’t people pay their property taxes?
There can be a lot of reasons, 3 of the most common ones are: 1 – the property owner died and no one paid his taxes though the heir can pay the tax later. 2 – the property owner run out of cash or just become unemployed. 3 – There are just people who would not want to part their money until the very last minute.
5. What would happen if the property owner dies?
In this case, the county will begin to forward tax notices to the last known address. The county will then advertise the tax sale. Usually, family members or the heirs pay the owner’s taxes.
6. How many tax lien certificates can I buy?
There is actually no limit on how many tax liens you want to have. You can bid and buy as many as you think your money will allow.
7. To whom do I pay?
You will be paying to a government agency, as there will be no brokers or intermediaries to pay.
8. Who will be paying me my returns?
The owner of the property will be paying you when they pay off their owed taxes. The county, municipality, or the government agency that collected cash from you will contact you and will ask to have the tax lien certificate returned. They will then send you a government cheque upon receipt.
9. Do I need to contact the homeowners?
You do not need to contact them; you do business with the government agency.
10. When do I get paid?
The municipality or the county will notify you once the owner of the property pays up his owed taxes.
If your friends or family has questions regarding tax liens, you now know what to answer.
How do tax lien certificates work? Well, lien certificates are utilized by real estate investors to bring in large-scale profits by claiming possession of properties at a fraction of its worth, or bid on low-profit loans to help householders hold on to their properties by giving them more time to bring up funds required to pay off their tax debts.
When these property taxes have been missed for a certain period, the county then has the right to confiscate the property and can either have it auctioned or sell it.
Some of the municipality governments forfeit properties during the first year of delinquency hence making larger profits, while other counties allow even years of unpaid taxes to accumulate before making any action. The back taxes being owed have a distinct effect on the landowner’s power to pay off back taxes and of course, the investor’s chance to bring in profit.
When buying tax lien certificates, it is crucial that you must understand that you are not actually purchasing the property. You are loaning the householder cash to pay the back taxes, with of course the assurance of repaying the loan with the fixed amount of interest.
Investing in tax lien certificates is considered to be absolutely risk-free and simple, especially to those investors who fully understand the process.
What do you need to know about tax deeds? Well, just to simplify, a tax deed sale is a real estate sale for owed taxes carried by the government, county, or state.
If these real estate taxes are not paid up within a conditioned time frame, these taxes are then regarded as delinquent. If somehow these taxes are still uncompensated and after the requirements are being met, the said property will then be sold at a county tax sale auction.
In the United States, half of the states are considered “lien states” while the other half are “deed states”. Unlike from tax liens wherein only the liens of the property are sold, a county that sells the property because of delinquent taxes is a tax deed state. Other than either being a “lien state” or a “deed state”, there are also states such as Georgia and Texas that are considered as hybrids. These hybrid states are capable of selling a property during a tax deed sale but still able to have the owner of the property pays off the tax property lien during a certain redemption period and then reclaims the property.
During the tax deed sale, many states have bidding done in increments, usually around ten dollars to a hundred dollars. Generally, the minimum bid is the overall amount of back taxes that is owed plus the interest. If ever the property was not purchased, the property’s title may then be reverted to the county government.
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- Exactly How To Start Buying Tax Liens Today
- Tips For Tax Lien Auction Success
- How To Avoid The Mistakes New Tax Lien Investors Make
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