What You Need to Know About Tax Lien Home Sales by Mitch Carson
in Investment / Retirement Planning (submitted 2013-08-12)
When a homeowner becomes delinquent in paying his property tax for whatever reason, the county to which he belongs can hold a tax lien home sale. This has to be done in order for the county to recover the unpaid real estate property taxes. As you may know, these taxes are used to fund basic civic services, paying for schools, libraries, police and fire departments.
What is the significance of a home lien?
Apart from paying for the above mentioned services, home lien sales are also used by county governments to fund public works like parks, hospitals, and many others. Without such strategy, government will lack funds to serve its constituents better. Therefore, holding a tax lien sale is imperative for the county to get the needed funds. This is accomplished by auctioning the lien to interested real estate investors.
How are auctions for tax lien home sales implemented?
Various bidding options are practiced by counties. Different counties have their own rules and methods used in the bidding of tax lien sales. For instance, there are counties using a 'bid down the interest' method. This is where the investor is willing to accept the lowest interest rate. In other cases, counties also make use of the typical rotational bidding style.
What about interests and redemption?
Where there are various procedures and regulations regarding public auctions, counties also have their own interest rate and redemption period. There are states imposing a 15% interest rate on tax liens to be redeemed within one year.
If the home owner is able to pay promptly, the certificate holder can earn the interest rate until the month that taxes were paid. However, if redemption period has lapsed and still the owner has not paid the taxes due, the certificate holder may now begin the foreclosure process.
What's the rule with online procedures?
It is of equal importance to be updated about procedures. Fortunately, there are some states holding tax lien sales online to give chance to those who can't be physically present at the time the auction is held. Furthermore, if you're interested in buying tax certificates online, do a research about the prerequisites for qualification. Study beforehand the regulations of which county you are going to invest in as well.
Always come to auctions prepared with your cash payment. Most states require immediate payment at the time of the tax lien sale. Finally, take time to visit the property so as to have a good ocular view of it. Before deciding to bid, take into account all information regarding the property. Otherwise, your investment may become useless if you discover that the property is worthless. Keep all these things above in mind. It pays to learn the strategies on how to buy tax lien properties to succeed at investing.
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