What Is A Tax Auction? - Bankruptcy Finance Blogs - Mysurechoice ...

Each state participates in some type of Tax Sale, the method utilised by local governments to collect their unpaid and past due real property assessments. For many investors these tax foreclosure sales can produce rewarding opportunities.

In several states once property owners rights are invalidated, they aren?t given the inherent right to pay past due real property taxes and the property can be purchased at a tax sale. In these states financiers don't legally have the right to pay overdue taxes for the property owner. Therefore , the county where the home or land is sited takes over the property, deeds the parcel to the county then auctions off the property.

These tax foreclosure sales are public bid tax auctions where the bids are composed of back delinquent taxes, any penalties and interest or expenses associated with the unpaid property taxes. Additionally, the real property tax foreclosure auction is usually considered the first lien. This suggests the property tax lien for the unpaid property taxes comes before any mortgage that could be on the property, or other judgments.

Foreclosure tax sales offer extraordinary opportunities:

?The opening bid is the lowest auction bid you will find for any sort of real property foreclosure sale.
?In most states, the real property tax lien is generally the primary lien being foreclosed. Accordingly, when a the county or an investor-buyer forecloses, they can wipe out any other liens against the property.

In some states the highest bidder acquires a deed to the property , however , that deed is burdened by a ?right of redemption? or the right to buy back the property. This means although a lien buyer pays off the unpaid property taxes at a tax sale the owner has the right to buy the property back from the lien buyer, with interest. Other states nevertheless , have no right of redemption. In Michigan, for instance, the Wayne County tax sale offers access to over 10,000 properties with minimum bids as little as $500.

In this situation where prior owner redemption is involved, the owner must pay the investor the amount of money that has been paid at the tax auction and interest. This type of tax sale creates an either/or situation. If the real property acquired is not redeemed by the owner the financier gets the title to the property at a price determined thru the tax foreclosure process. However , if the property is ?redeemed? by the prior owner, the investor recovers their initial cash outlay and interest. Investors can make a sizable profit whether the property owner redeems the tax certificate or not. Rates for some states are as high as 24% with a yearly yield as high as 240%

There are property tax certificate tax sales that aren?t as competitive as tax auction sales because all bidding is eliminated. In several states, tax certificates sell ?over the counter? on a specific day of the month and have a shorter redemption period. This is where a smart investor can make a large profit. As an example, in Oklahoma an investor must wait about 3 months before starting the process of making an application for a deed. If the property owner redeems the certificate, the investor will get back the investment plus 8% interest from the date the certificate was bought. If the certificate isn?t redeemed the investor will end up owning the property.

In most areas tax sales are conducted at the local government level, typically by county officers but there are 2 states that conduct tax delinquent land sales: Arkansas and West Virginia. These states include the assessed value of the land in addition to the unpaid property taxes. States nonetheless , aren?t usually involved in tax foreclosure sales.

Understanding a county?s regulations when it come to tax sales is vital. Research prior to the sale and know your investment completely. Clearly, tax sales in any form are valuable and lucrative for investors. Can you think of another way to make a significant profit on real estate for pennies on the dollar?

MichiganTaxForeclosureAuctions.com provides details on tax auctions in the State of Michigan. The site also provides tips and info as it is related to tax sales countrywide.

Source: http://blog-finance-bankruptcy.mysurechoice.com/3458/what-is-a-tax-auction/

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