Vacant home w/ rumored back taxes...can I make a deal happen, & how?

5 Replies

There's a vacant home I came upon while out bike riding in my neighborhood. In great condition as far as vacant homes go; checked on the MLS & it was an expired short sale nearly 5 years ago, with a list price waaay below market in this area. I'm definitely interested.

Knocked on the next door neighbor's door, intro'd myself & asked if he knew about the property.  He said it's bank-owned, lots of people have checked out the house--but there are supposedly a ton of back taxes owed--close to 100k, according to the neighbor.  Said the owner just skipped out & disappeared a while back, leaving the taxes owed. 

On its property card on the city's tax site, the private owner is listed (w/ the same address)--which is why I was initially led to believe it wasn't yet bank-owned.  However, the notice on the door lists a field rep service that's used by a lot of banks.  

What's the best way to go about doing a possible deal? I'm wondering if I'd have better luck contacting the bank listed as holding the mortgage on the last MLS listing, rather than tracking down the previous owner. Also, would the bank be able to tell me how much back taxes are owed, and would that be classified as a tax lien deal? (How do tax lien deals work, anyway?) Would I as the buyer be responsible for the back taxes plus the price of the house?  

Sorry for the long-winded multitude of questions, lol.  But if I can get it at below-market (even to live in first & then rent out later), that would be awesome.

Do a title search among other due diligence. What is your aim as far as exit strategy goes? Do you want a buy and hold? What would it rent for? Is the property flippable(as a fix and flip) and if so is it something you can handle? Maybe you would rather flip the contract and get a wholesaler's profit.

Kudos,

Mary

If the price was right, I'd look at it as a possible buy & hold (it's in my neighborhood, which I love--close to my daughter's school, and I could own again instead of renting & then acquire future properties against it, perhaps.)

The question is, would I have to pay any back taxes along w/ the purchase price (thus killing the deal)?

Yes when a property is sold back taxes get paid before anything else. It is possible but extremely rare for taxes to be negotiated down. It is even less likely to happen if either the bank or the owner gets any money. The problem with any big bank it is almost impossible to get to a person that has any information or power to make a decision. 

My guess is at some point a tax lien was sold. I don't know the tax sale laws in your area but knowing them can definitely help finding leverage to get deals done. The taxes due are leverage against the bank. 

The owner may be wrong that it has been foreclosed upon. Lots of times banks just let properties sit or even start foreclosure and never finish.

Bottom line you have a lot more research to do. It is probably best to start with finding the owner.  These deals can be very tough to pull together but if you can they can be very profitable.

Originally posted by @Vonetta Booker:

If the price was right, I'd look at it as a possible buy & hold (it's in my neighborhood, which I love--close to my daughter's school, and I could own again instead of renting & then acquire future properties against it, perhaps.)

The question is, would I have to pay any back taxes along w/ the purchase price (thus killing the deal)?

 If paying back taxes would 'kill the deal' then there its not a deal. Those taxes would absolutely have to be paid by you or the seller before title changes ownership, no doubt. Run the numbers on an excel spreadsheet and see whats the profit margin even as a rental. It makes a difference if you are paying all cash or getting financed. Unless you see some serious appreciation in that area within the next few quarters; If you are at a loss then you might want to walk away. Remember investors make their money at purchase...

Kudos,

Mary 

Good points--I think I'll do some more research & try to track down the owner.  Thanks for your advice, @Mary B. & @Ned Carey !

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