Buying tax-sale property; Do some good homework before bid time at auction
If you're planning to bid on a tax-delinquent property at a county auction, you should be well prepared before the date of the sale. After you've winnowed down your list of prospective buys, the only items that remain on the list are those properties you'd like to own if the price is right.
Before you buy anything, check to be sure that the owner of your candidate lots will not owe any money is right.
Before you buy anything, check to be sure that the owner of your candidate lots will not owe any money for liens.
Most tax sales clear ordinary kinds of liens. (A lien is a claim against a piece of property.)
Mechanics liens, court judgments, back county taxes, and so on are erased when property is sold at a county tax auction. Verify precisely which liens are cleared by the tax sale and which are not by inquiring from your county officials.
Many liens are not cleared, however, especially those of other government agencies, such as cities and towns.
If you buy the property at a county tax sale, you will acquire a piece of property that might later be sold at a city auction unless you pay the overdue liens.Now you see why you have to check!
Get the local officials to show you how the various types of liens are recorded. Odds are you'll have to look them up yourself, since there will be other pople doing exactly what you are doing. It is unreasonable to expect the civil servants to do all your work for you.
Most are quite willing to display their own knowledge of the system, however. You would be well advised to get their suggestions on where else to check. Mosquito control, demolition, street improvements, and the like are frequently financed by assessments against the property that benefits. That might mean you.
Check your 3-by-5 cards for hints. Does it show an old foundation? May be there is a lien for the demolition of a previous structure. Is there a storm drain nearby? Check to be sure it has been paid for.
By now, your list of candidate purchases has been cut down considerably. Check with the appropriate town planners, zoning departments, or other agencies to be sure there are no undue restrictions on any parcel. Maybe the previous owner let the taxes slide because the soil would not support even a small structure. Is the property in a restricted area? A preserve? Open space? Landslide area? Find out now before you own it.
Also, find out from the county officials precisely what the precedures are for registering, bidding, and paying for your purchases, if any.
Once you get to the auction, it would be helpful to meet and converse with other auctiongoers, especially the more experienced people. Despite the fact that you may be their competition, most people are particularly decent at auctions.
You can always verify any information with the auction personnel if it is important.
One reason people are willing to share information at an auction is the real possibility that they can learn something from you, too. They may have found a lien that you missed, know the history of a given parcel, or just like to talk.
You will want to inquire, somewhere along the line, as to when the property becomes legally yours. Some states grant a tax deed to an auction purchaser, but require a year to pass after the auction before the new buyer can resell his lot.
Learn the facts in your county and state before you buy property at a tax auction. Be sure you can afford to wait the statutory period.
Be sure you will be able to pay any liens that you assume, keep the property cleared, and act like a responsible landlord. Once you have satisfied yourself as to these details, relax. You are ready to bid for the property at the auction.
Only you can decide how much the propperty is worth to you. Try to follow the auction so you can gauge the validity of your estimates on parcels that you decided not to bid on.
Talk to the experienced people around you. If you ask about a parcel that they do not intend to bid on, they may tell you what they think of its value.
Make sure that the maximum amount you plan to bid is set well below the lowest estimate of market value. It would be a shame to have done all your homework and then get carried away and bid too much for a parcel. If you have several candidates to bid on, don't rus into the first one the auctioneer tries to sell.
Remeber that not everyone who attends a public auction knows what he is doing. Not everyone stands on the land before he buys it. Not everyone checks liens. If you bid with the idea of paying off a lien that the other bidder knows nothing about, you will obviously be outbid.
It is hard to believe that some people will invest their savings without any knowledge, but that doesn't mean you should, too.
Nothing gives a person more confidence than owning land -- nothing, that is, except doing his homework and knowing what he is buying.
Even if he only buys one parcel for a few hundred dollars the first time, he'll find few investme nts as rewarding as buying his first tax-delinquent property