Purchasing property for little more than back taxes can be accomplished by winning tax deed auctions online. Doing business this way can be risky if you haven't actually seen the property in person. However, if you have a background in house sales or contracting, purchasing property this way can increase your net worth.
What are Tax Deed Sales?
A tax deed sale is held to recover past-due taxes on a property. Usually, a sale is not completed until the past-due taxes have been unrecoverable for at least 22 months. A county's deputy clerk or clerk of the circuit court conducts the sale of tax deeds. Up until the winner of an auction renders payment for the tax deed auction, the actual owner may make payment and regain their property.
Places to Bid Online
Some examples of places where you can bid online or find online tax deed auctions include the following websites.
- Lee County Clerk of Courts
- Polk County Clerk of Courts
- Tax Lien Certificates Directory
Check with your local municipality to learn whether or not tax deed auction listings are available online.
Research the Property
Just like buying a car or home, it is very important to research the purchase of a tax deed. In most cases you are not just paying off the back taxes, you are also assuming any liens against the property as well. Potential bidders should request an Ownership and Encumbrance Report from the county clerk's office. Government liens and judgments will exist against a property until all money owed is paid in full, regardless of the owner.
Bidding on Tax Deed Auctions Online
There are some things to keep in mind when you go to bid on tax deed auctions on the Internet. These include:
- Most tax deed auctions online require that those planning on bidding provide some sort of guaranty that they can afford to purchase the tax deed. Usually this includes a bank guarantee, letter of credit or a cashier's check. Occasionally, a security deposit of several hundred dollars may also be acceptable.
- Whether or not a tax deed auction is held online is largely up to the county in which the auction is being held. Savvy courts are finding that it is profitable to hold these auctions online in order to get the highest bids.
- Check local newspapers for auction notices or contact your county clerk's office directly to inquire about the auctions.
- Auctions may occur over several hours or several days. It is ultimately up to the county clerk's office how it runs the auction.
- If you are very interested in winning a particular auction you should know the exact time and day that the auction ends; most bidding wars occur towards the end of an auction.
- In most tax deed auctions online, payment in full is required within 24 hours. If the money isn't received in the clerk's office within this time period, the winning bidder loses any claim on the property. Additional costs may also be incurred such as losing security deposits or being barred from future bidding on tax deed auctions for a set period of time.
Possession of the Property
If you are the winning bidder, paying the total amount due on the tax lien gives you the right to immediate possession of the property. After the winning bidder has paid the total amount due, they are the rightful owner of the property, and the previous owner no longer has any legal rights in regard to the property.
Many people believe that acquiring property through tax deed auctions is a great way to turn a buck. The reality may be quite different. Remember the following key points:
- Researching property is very important since it is an investment.
- Bidders should be aware that there might be other liens against the property which the winning bidder will be responsible for.
- Bidders on tax liens should understand that payment on the winning bid is required within a particular time frame. If payment is not made within that time, the county clerk's office can refuse payment, fine the bidder or bar them from bidding in future auctions.
Careful research and knowing the ins and out of the process can lead to a successful tax deed auction experience.