Tax liens are available in most states. A county sells a tax lien when a homeowner fails to pay taxes. Liens do not represent ownership of the property. Liens are recorded and prevent property from being sold or transferred until the debt is satisfied. Thus, a homeowner must pay the tax lien in order to the sell the house or maintain clear title. In some jurisdictions, tax lienholders can foreclose on properties after the homeowner continues to not pay.
Determine the amount of money you can afford. Auctions usually are fast paced, so you might spend lots of money without realizing it. Make sure you have necessary funds, as you must immediately pay the bid or a deposit. Ask about the lien's interest rate, which is usually fixed and impacts your potential profits.
Research the property, including whether it is vacant or a rental. You should study the property's condition and title history. For instance, find out whether any other liens are outstanding, such as a contractor's or child support lien.
Place the highest bid. Depending on the county, you can bid electronically or in person. The current property owner might appear to observe the auction.
Select the locations where you want to maintain properties. Counties post 30-day notices about upcoming auctions in local papers. Check the county treasurer's website or register in a national database like taxliens.com. Be familiar with the specific county's procedures, such as whether auctions are held regularly.
File a foreclosure proceeding when applicable. Tax lienholder rights vary throughout the country. However, if the homeowner refuses to pay taxes, you can likely initiate a lawsuit in a court to obtain a marketable title. You then can sell the property once the foreclosure is complete.
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