How to Buy a Foreclosed Property by Paying the Back Taxes

Properties with back taxes can be foreclosed and sold through auctions.

Properties with back taxes can be foreclosed and sold through auctions.

When you hear about foreclosures, you probably relate it to a homeowner defaulting on his mortgage payments. While this is true, foreclosures can also occur as a result of unpaid property taxes. Individual states determine how to deal with properties that have back taxes. States that hold tax deed sales allow potential buyers to bid on properties with back taxes to purchase them.

Look in a local newspaper or on the county's website for advertisements of upcoming tax deed sales. Most places hold the sales at the same time each year and some counties hold multiple sales per year.

Contact the county tax collector -- or person in charge of the auction -- to register to participate in the sale. Pay a deposit -- if required -- to attend the auction.

Review the listing for properties you would like to bid on. Foreclosed properties are usually sold "as is" or with the warning "buyer beware." They might require repairs or extensive renovations. The ad should list the physical address of the property.

Attend the auction and place your bids. If you are the high bidder you will need to submit the payment in full on the day of the sale. Some counties might allow for other arrangements to be worked out for payment.

Wait for the tax deed to be signed and recorded. Once this is complete you are the legal owner of the property.

Items you will need

  • Listing of properties for sale
  • Certified check

Tip

  • Properties sold at auction due to back taxes often go for much less than the fair market value because the bidding is taking place on the amount of the back taxes, not the mortgage loan.

Warning

  • If the property owner is still occupying the property after the deed is recorded, you will need to follow the formal eviction procedure. Typically this involves giving him a written notice. If he doesn't respond to the notice you may need to seek legal help, but laws vary by state.
 

Photo Credits

  • Stockbyte/Stockbyte/Getty Images