Most people know that you can purchase properties at tax sale auctions or even after them, but in this video we discuss buying them BEFORE the tax sale…and why you’d even want to in the first place!
Transcript:
Hi! Casey Denman here with TheTaxSaleAcademy.com. In this video, we’re talking about buying tax sale properties BEFORE the tax sale auction.
Now usually we teach how to buy these properties at tax sale auctions, or in some cases, even after tax sale auction. But this video is all about buying these properties BEFORE the tax sale auction.
Now there’s one primary reason that you would ever consider doing this. And that is to avoid competition. You know, if you have a piece of property that you’re very, very interested in and you just have to have it, but you’re afraid that it’s going to garner a lot of attention from other bidders at the tax sale auction and that they will bid your price that you’re paying lots and lots of money for – much more than you can either afford or you want to pay – you could potentially go after the property before it reaches the point where it’s going to be auctioned off at a tax sale.
Now, it’s definitely a risk because it does involve a lot of time, it can involve some additional money, and it can involve a lot of effort. You know, all these can kind of be a waste if the property sells for the opening bid at the tax sale auction. But if you’re certain that it’ll sell for a lot of money, then you could potentially buy it before that auction.
Now the first step, of course, is to track the owner down. It sounds kind of easy, but believe me, it’s not. A lot of times, these tax sale properties are here because the owner has just vanished. You know, they’ve died, they could be in jail, it could be owned by an estate. It could be owned by somebody that just doesn’t care, and they left and they went across the country or they’ve moved out of the country. These people can be very, very hard to track down sometimes.
Now, when it comes to tracking them down, of course, what you can do is contact the county to ask for the addresses or phone numbers or any information they’ll give you that can help you locate these owners.
If you’re unable to locate them, you could actually consider hiring a company to locate them for you. You know, whether it’s a private investigator or a background check company, there’s a lot of companies that will try to attempt to locate people for you. Of course, this is going to add on to the property cost.
Now, if you can find these people – and that’s a huge if – you have to explain what’s going on to them. You know, tell them they’re about to lose this piece of property to tax foreclosure if action is not taken right now. And this could raise a red flag for some people, which means you could have wasted all the time you invested up to this point. You know, that you could tell them this and they could say, “Oh, I didn’t even know that. Let me stroke a check and pay the property off and you as the investor can be on your way and I don’t really care about you.”
Now sometimes, of course, what they’ll say is, “Yes, I understood that the property is going through tax foreclosure. I just don’t have the money to pay it.” So what you do there is as the investor, you’ll tell them, “Listen, I am interested in helping you. Not only will I pay the back due taxes and catch everything up on this piece of property, but I will also give you cash above and beyond those taxes.”
Now this cash completely depends on what you as the investor think the property is worth for you to buy it before auction. You know, it could be $100, it could be $500 or $1,000. It could be $5,000 or $50,000. It just really depends on how much money you think you’re able to save by buying this piece of property before the auction.
And then of course, you can go through a title company in this situation because the title company will basically walk you through and help you pay out these taxes. They’ll make sure you have title insurance and all sorts of other great stuff, which is another advantage of buying a piece of property before it goes through the auction. And that is, of course, that the title will be clear. There will be no title cloud because it will not have gone completely through that tax foreclosure process. And that, of course, if you’re planning on selling it, with title insurance it can save you money in the long run compared to buying it at the tax sale auction.
Now obviously, it can be very, very beneficial, and of course time-consuming, buying these properties ahead of time. But one thing you have to be aware of are the deadlines. You have to be informed of the deadlines when it applies to the tax foreclosure system in the area that you’re looking to buy this piece of property in. The last thing you want to do is put a contract on a piece of property, think you have this property, maybe even put a sizeable downpayment on the property, only to realize that tomorrow or the day after you do that, it is too late. You know, the county has either added loads and loads of interest or fees on top of it or the county has taken ownership of it or the county just has a cut off line, which means you have wasted so much time and so much effort. So you have to be cognizant of all the deadlines involved of the tax foreclosure process in the area that you’re looking to buy the piece of property for before the auction.
I really hope you’ve enjoyed this video. If you’d like to see similar videos, head on over to my website at TheTaxSaleAcademy.com, which you can do by clicking the blue link right here next to my head. Once you get there, download your free copy of my e-book, The Tax Sale Investing Blueprint.
Have a wonderful day, folks! Bye-bye.