Find a Home Today!

You are 4 easy steps to join the leader online foreclosure listings database. Free foreclosure investing guide when you join our services.

It's fast and easy!

Tax Deed Sales - A Close Variant of Foreclosure Sales

Similarities and differences with foreclosures

Like foreclosure sales, they are forced sale under legal requirements for the recovery of the amount in defaults. The Government Tax Department however, initiates the tax deed sales, for the recovery of property tax, along with the interest due, unlike the foreclosure sales, which the mortgage lenders initiate for the recovery of their outstanding loan and interest amount. The sale under tax deed can take the form of a publicly held auction, or that of a private sale, if auction sale fails.

Tips for buying a property under a tax deed sales

• Screening. The first step for buying such properties is a thorough research of the available options. You can find the listings through various public databases. Here, you can short list the properties based on various criteria, like geographical area, minimum bidding price, and so on. This exercise will further help you narrow down the options at later stages and making an informed choice.
• Inspection. You should try to arrange for a personal visit and self-inspection of the property before participating in the bidding. This is a good exercise, which can throw light upon any not-so-obvious flaws or maintenance issues. More so, investment in property being a major decision, its physical condition becomes a focus area.
• Redemption period. Most of the states allow a redemption period for the properties sold under the tax deed sales. Under these provisions, the defaulters can reclaim the property after the payment of auction price and the penalties imposed. The redemption period ranges between 6 months to 2 years, before the provision becomes time-barred.
• Foreclosure Laws: Availing the services of a legal expert, experienced in the field, is also a prerequisite, since the legal requirements could become too complex for a common person. Beware of quacks however!

Benefits to the buyer

• Discounts. Since, in tax deed sales, the Government, rather than a profit making entity, puts the property on sale; therefore, the focus area is to recover delinquent taxes, interest thereon, legal, and other costs only. As a result, the minimum bid prices are usually much less than the actual value of the property.
• Returns. If you intend to resell the property later, there is a potential of making big profits, mainly on the account of much higher valuation over the original auction price.
• Maintenance. Keep your eyes open right at the time of purchase and you can easily save a big chunk of the outflow of post-acquisition repairs and maintenance.