Anyone have experience purchasing a Tax Lien prior to Auction

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Anyone have experience purchasing a Tax Lien prior to Auction

Danny Allende
Member since 2018 · 1 post · 0 votes

I am new to this, but have found that my niche for my first deal would be better suited in purchasing Tax Liens. The payoff is great and little downside, as long as I do my due diligence, which I am doing. 

What I am asking is if anyone here has experience approaching a home owner in Tax Lien Default, ready to lose their homes to auction. I found a good deal that I can move on, and would like to approach the home owner prior to the auction and possibly make them some money as well.

I Found the owner, the tax information, searched the property, done comps(well working them now) and in a few days I'll do a complete Title History and Chain of Title and if necessary buy Title Insurance. Did I say I have one month to get all of this done. 

My only hangup is approaching the home owner, either with a letter or face to face. The auction is in a month and I really want to be ahead of everything prior to. Like I said it is a good deal and I stand to make a really good profit, if it all goes according to plan.

Anyone with experience and knowledge would be greatly appreciated. 

Danny.

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  • Rachal Davis
    Real Estate Professional · Conway, AR · Member since 2016 · 1 post · 0 votes
    8y

    You really need to check out Rick Dawson has a course I purchased 

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  • Dennis Weber
    Real Estate Investor · Indianapolis, IN · Member since 2014 · 316 posts · 165 votes
    8y

    They aren’t going to lose their home in a tax lien sale. There is still the redemption period before they lose it. 

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    8y

    @Danny Allende I see this is your first post so welcome to BP

    What you want to do is actually a common strategy. However it is not near as easy as you think. What you haven't taking into account is there may be a mortgage on the property that has to be paid to make a deal. It is not as simple as paying off the taxes and getting the property. 

    In my area only about 1/3 of the properties behind in taxes actually wind up going into tax sale. Most pay off before the sale. Of the ones that do go into the sale nationally only about 5% lose their property to foreclosure. 

    SO most you will approach will not be particularly motivated. An important concept to understand in this business is that just because someone should be motivated does not mean they will be motivated. 

    and in a few days I'll do a complete Title History and Chain of Title and if necessary buy Title Insurance.

    First get the property under contract. There is no point in wasting money on title work if you don't even have a deal on the property yet. Regarding title insurance that only comes at settlement, you do not get that in advance. 

    First you have no idea if you found a good deal. You have not even talked to the owner.  When I approach someone in a tough situation, I get right to the point but in a way that is not condescending or insulting.  I might say something like 'I was going through public records, "are you aware your property is scheduled for tax auction next month?"

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  • Ed Tamayo
    Investor · Sugar Hill, GA · Member since 2014 · 168 posts · 97 votes
    8y

    "I am new to this, but have found that my niche for my first deal would be better suited in purchasing Tax Liens. The payoff is great and little downside, as long as I do my due diligence, which I am doing.

    What I am asking is if anyone here has experience approaching a home owner in Tax Lien Default, ready to lose their homes to auction. I found a good deal that I can move on, and would like to approach the home owner prior to the auction and possibly make them some money as well."

    I have purchased properties before the tax sale. I do it by first making some basic selection out of the tax sale list and then sending letters to the owners. I don't do the due diligence unless I get a positive response from the property owner.   All the properties I have purchased this way have worked out well. 

    What I say is around the lines of  "you may be aware of not but the the county has listed your property for a tax sale, you can still avoid the tax sale if you pay the taxes before the deadline but if you rather just sale this property, I would like to have the opportunity to buy it from you".

    I have also considered using the line "I'll buy it from you before you loose it to the tax sale" but I decided against it as it is deceptive and could be seen that way.  

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