What Are ?
Real estate tax sales are auctions where delinquent taxes on properties are paid by bidders who are hoping to acquire the properties in question. The auctions are conducted either by local governments or their agents, and they provide the opportunity for interested buyers to purchase properties at discounted prices.
What Happens at A Real Estate Tax Sale?
At a tax sale auction, willing bidders submit bids for available parcels of property. Once the auction is complete, the highest bidder takes ownership of the property and has to pay the taxes owed on it. Oftentimes, the bidder also has to pay additional fees, such as advertising costs and auctioneer fees. The bidding process is transparent, and all interested buyers can track the progress of the sale and keep up to date on the latest bids.
Real estate tax sales can offer many benefits to buyers. Here are a few:
- Bargain Prices – Because the properties are being sold to pay off delinquent taxes, they are often sold at significantly lower prices than they normally would in a conventional sale.
- Easy to Track – Most government-run tax sale auctions are conducted online and all the pertinent information is easy to find and track.
- Less Competition – Compared to other categories of real estate investing, tax sales have traditionally had less competition and higher potential returns.
- Streamlined Transactions – Because all of the details around the property taxes are already known, the transaction process is usually more streamlined than it would be in a typical real estate transaction.
While there are many benefits to investing in real estate tax sales, there are some risks and downsides as well. These include:
- Legal Risks – It’s important to ensure that the taxes have been properly paid and that everything is in order before bidding on a property. It’s also important that the property is unencumbered and any liens are removed.
- Unseen Issues – It’s virtually impossible to know the full condition of a property before bidding on it. There may be hidden issues that can end up costing buyers quite a lot of money in repairs.
- Competition for Quality Properties – Because these types of auctions are becoming more popular, buyers can find themselves in a bidding war with more experienced investors. The chance of getting a great deal at a tax sale is not guaranteed.
Real estate tax sales can be a great opportunity for investors to acquire properties at discounted prices. However, it’s important to understand the risks and legal issues before participating in one. With the right knowledge and preparation, buyers can find themselves with a fantastic deal that yields great returns.