Tax Sale: Buying and Arming Yourself With Information

If you have the dedication and the funds to get started, you can make a decent second income or even a living purchasing through tax sale events. These sales take place when a homeowner has failed to pay their taxes to the government and a lien has been put on the property. The government wants to get what it can out of the property and that means they will sell either the property or the lien to a third-party. For you, it can mean making big purchases for a fraction of the worth. If you can then turn around and make a profit, which you often can, you can see how it can easily add up. Here are some things you need to know about getting into the business.

Unless you have a good source of listings, you’ll need to get creative when it comes to finding your next tax sale. That could mean going to the courthouse and looking through all of the upcoming listings, or—better yet—it could mean making some nice connections through real estate agents, banks, and those who work in the government. An inside source at the sheriff’s department might not be a bad thing to have, either. Of course, these sources aren’t easy to come by, but you’ll need some way of getting that information.

Before the day of the tax sale, do your own independent research. The government sells these properties as is, and there won’t be any opportunity for a refund if you don’t like what you’ve bought. That means you need to be sure beforehand. The government listings rarely go out of their way to explain much about the property. Use a title search and other sources to make sure the property is in good standings and that you aren’t inheriting a bunch of debt in a lot of different places.

Keep in mind that a tax sale is not a lay-a-way program. You need to have the money right then and there. Don’t make a bid you can’t afford to cover by at least the end of the bidding day. That means taking into consideration any and all costs associated with the sale. You may be able to get a loan to cover the purchase, but this needs to be handled before you make your bid. If you default on the purchase, you’re likely to be locked out of future auctions.