Tax Deed Sales – A Way to Get Cheap Property? Not Usually

Tax Deed Sales and Cheap Property

Are tax deed sales an effective way to acquire property for bargain prices? The short answer is: hardly ever. Let’s look at a few reasons why purchasing property at tax deed sales can be problematic.

The first obstacle you’ll encounter is that you will have to research each and every property on the tax sale list. In many areas, hundreds or even thousands of properties can be listed on a county’s tax sale list. When there are this many properties listed, it becomes a huge expenditure of time to drive to each property (if you can even find some of them without an address) and assess a value you’d be willing to pay for each one.

Tax Deed Sales - Bidding Ruins the Fun

Bidding Kills Bargains At Most Tax Deed Sales

Also with a large list, there will be mostly garbage properties available that will not even be worth the taxes owed. It’s easy to confuse an adjacent lot, next to a valuable property, with the property you’re looking to bid on, and make a bad purchase.

Now that you’ve spent hours researching the properties, you’ll have to have cash available to purchase the property at the sale. Don’t think that the amount listed in the list is necessarily what you will be able to purchase the property for – – this is just the minimum bid.

At the sale, you’ll be joined at most tax deed sales by several other bidders with deep pockets. They’ll almost always bid the property out of the bargain range and closer to retail value.

The last significant item is that most properties purchased at tax deed sales do not have marketable title at the time you buy them. Though any mortgages or liens are usually wiped out by the tax sale process, title companies want an additional step performed, called a quiet title, which can take 3-4 months and cost an additional $500-$2000 to perform. Many times during the quiet title process, interested parties who were not sufficiently noticed about the sale will come forward and attempt to overturn your deed. This is the whole reason the title companies want the quiet title done successfully – – they have been burned too many times by insuring tax deeds bought at auction.

The only way you will succeed at tax deed sales in buying a cheap property, is if you manage to attend an auction where nobody shows up, or everybody who does show up misses a valuable property on the list and does not bid.

These experiences will be few and far between, and you’ll have to research all tax deed sales in the meantime to be prepared in the event you get lucky.

However, tax deed sales do present a great investing opportunity. You can simply contact the owners of property going to tax deed sales and buy the property directly from them. Much of the time, the reason the property is going to tax deed sale is because the owner doesn’t want it. In these circumstances you can offer the owner as little as $50 for the deed to the property and pay the amount owed in taxes, with no quiet title or bidding necessary.

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