When property owners fail to pay required property taxes, the government can seize and sell the real estate to recover unpaid taxes. These sales present opportunity for investors to purchase distressed homes, land, and commercial property often below market value. This guide covers the tax delinquent properties for sale process, how to research and find listings, bidding procedures, and tips for buyers.
Overview of Tax Delinquent Properties for Sales
Every year, thousands of U.S. properties have liens placed against them for delinquent property taxes. If the taxes remain unpaid after a redemption period, the property faces a tax sale or auction to recover taxes owed.
Buyers can acquire these properties from local and state governments at below market value. However, tax sales carry risks around titles, liens, and post-purchase expenses buyers must manage carefully. Performing due diligence is crucial.
Tax delinquent properties typically follow this process:
- Owner fails to pay required property taxes.
- Government places lien against the property for unpaid taxes.
- Lien remains unpaid after specified redemption period.
- Property is sold at public auction to recover taxes owed.
- Excess proceeds beyond taxes owed go to original owner.
How to Find Tax Delinquent Properties for Sale
Tax delinquent properties are sold by various city, county, and state agencies. Here are some places to find listings:
- County tax assessor – Search county sites for tax delinquency sales.
- Municipal tax collector – Cities hold property tax sales for unpaid city taxes.
- State departments of revenue – State sites list sales for back state taxes.
- Auction websites – Private sites like Bid4Assets host tax sales online.
- Public notices – Check newspapers and legal notices for upcoming tax sales.
- Real estate sites – Zillow, Realtor.com and others feature some distressed tax sales.
Search for listings across multiple sources to find tax delinquent properties for sale in your desired locations.
Buying Tax Delinquent Property at Auction
If you want to bid on tax delinquent properties, understand the local auction process:
- Registration – You typically must register in advance and meet requirements to bid.
- Starting bids – Opening bids generally equal at least the total taxes and fees owed.
- Competing bids – Other investors will bid against you, often driving prices above the opening bid. Go in with a bidding limit and strategy.
- Bid increments – Auctions have minimum bid increment amounts, often 1% to 5% of the previous bid. Understand the rules.
- Payment – Winning bidders generally must pay a portion of or the entire purchase price plus fees within 24-72 hours. Know the terms.
- Title conveyance – It may take 30 days or more to receive the deed after finalizing purchase. Verify title insurance policies.
Carefully research the rules before bidding in your first tax sale. As with any auction, it helps to have financing pre-approved and a firm maximum bid amount in mind.
Checking Out and Viewing Tax Delinquent Properties
Before bidding, fully check out tax delinquent properties:
- Inspect the property – Do a walkthrough or visual inspection to assess condition and identify needed repairs.
- Search public records – Check title documents, deed history, back taxes, mortgages, liens, zoning issues, unpaid bills.
- Verify property details – Confirm lot size, square footage, beds/baths, and anything else relevant to value.
- Research permits – Look into open permits, violations, or condemned status.
- Evaluate rental potential – If investing, determine realistic rental rates and demand for the area.
- Interview neighbors – Ask about issues with the property or tenants.
Thorough inspections and public record searches are vital for assessing risks and making informed bids. Expect cleanup and repairs to get properties rent-ready.
Risks and Drawbacks of Tax Sales
While they can yield deals, tax sales come with drawbacks to consider:
- Limited viewing – You may get very little interior access before auction.
- Title problems – Past liens or ownership issues can create challenges.
- Upfront costs – In addition to the bid price, expect fees, back taxes, and immediate repairs.
- Sight unseen sales – If buying online, you may have limited visibility into property condition.
- Redemption rights – Former owners may have rights to reclaim the property for a period after the sale.
- Occupied properties – Current tenants may have lease rights you must honor.
- As-is sales – Most tax sales are as-is with no seller disclosures or property representations.
Proceed with caution – don’t assume tax sales are guaranteed diamonds in the rough. Managing risks takes diligence.
Tips for Buying Tax Delinquent Properties
If you decide to purchase tax delinquent real estate, reduce risks by:
- Researching title history comprehensively
- Inspecting properties carefully before bidding
- Factoring in needed repairs and upgrades
- Understanding all lienholder rights and obligations
- Working with real estate and tax attorneys
- Investigating redemption rights thoroughly
- Ensuring insurability of the property
- Being prepared to pay all back taxes and fees upfront
- Confirming your financing is pre-approved
With patience and rigorous due diligence, it’s possible to secure distressed properties at tax sales for below market value – but there are never guarantees. Tread carefully.
Conclusion
Tax delinquent real estate auctions provide investors an opportunity to purchase properties at bargain prices. However, buyers must perform thorough due diligence to assess title validity, condition, occupancy status, costs, liens, and redemption rights to avoid inheriting headaches down the road. A measured bidding strategy coupled with in-depth research and professional guidance allows buyers to maximize upside while minimizing risks with tax sale properties.
