Counties sell property when the owner fails to pay the real estate tax for a specified period of time. Depending on the county and state regulations, the property usually sells by public auction to the highest bidder. In some states, counties sell tax lien certificates. The successful bidder owns a tax lien certificate, a lien on the property. If the property owner doesn’t redeem the property by paying the back taxes and costs, the holder of the tax lien certificate may eventually take ownership. To invest in property before an auction, an investor must identify property subject to a tax sale.
Contact the county tax collector’s office to determine the local rules and regulations for the tax auctions. In larger counties, tax auctions follow a set schedule. In smaller counties, auctions are scheduled every few years. Find the date of the auction.
Check with the county treasurer’s or recorder’s office to determine which properties have unpaid property taxes. Some counties publish lists of property with unpaid taxes yearly. When a property has unpaid taxes for the specified number of years, the property is scheduled for auction.
Read the legal section of the local newspaper to find notices of upcoming tax auctions. Often the notices list the current owners and the addresses of properties on which taxes are delinquent. Some counties publish handouts with parcel maps of the properties. Other counties publish parcel maps online several weeks before the auction.
Locate the property listed on the tax auction list. If occupied structures exist on the property, chances are the property will be redeemed before the auction. In that situation, the value of the property greatly exceeds the tax due. Owners redeem the property by paying all delinquent taxes. If the owners can’t afford to pay the back taxes, they might sell the property.
Contact the county assessor’s office to find the current assessed value of the property. The minimum bid at a tax auction is usually the total amount of unpaid taxes plus the county’s auction cost. Compare the assessed value of the property to the minimum bid at the tax auction to help formulate an offer.
Inspect the property carefully. Determine if the property is suitable for its intended purpose. Check with the county planning department to determine the zoning and locate any building limitations for the property. Avoid property with hazardous materials, which might require a costly cleanup.
Determine a fair offer for the property and present it to the property owners. Be prepared to pay all delinquent taxes to the county at the time of purchase.
- Consult a real estate broker or agent to assist with the purchase of the house.
Kim Dieter has taught agriscience classes, developed curriculum and participated in the school accreditation process at the secondary and community college levels since 1980. She holds a Master of Science degree from the University of California, Davis, in animal science.