Free & clear property going to tax lien sale.

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I see properties with high equity or even free and clear properties pending a tax lien sale. Why don't the home owners borrow against their equity or sell their house and pay the back taxes prior to the sheriff sale? All I can think of is that they can't qualify for a  loan, or the house needs so many repairs that they can't find a buyer. What am I missing?

Often it is because it is  free and clear that it goes to tax sale!  When most people have a mortgage the taxes get paid by the mortgage company. When the property gets paid off the owners often forget /neglect to pay the taxes. 

People let properties go into tax sale and sometimes lose them to tax foreclosure for all kinds of reasons. Many times properties with value and equity are lost simply due to lazyness/negligence.

Thanks Ned,

I hadn't thought about lenders paying taxes when there is a mortgage. Still, it's hard for me to understand why someone would let a $100,000 in equity just be lost for failure to pay $5,000 in back taxes. Some of these are very valuable properties, and I would expect the owners to be competent about their financial affairs.

where are you finding these? What volume are they coming thru at?

At that level of spread, even if there is rehab to be done, that should still be an OK profit. 

The ones that actually get foreclosed on are generally not the ones worth $100K. They are often derelict and or abandoned properties. If people can't or won't pay their taxes they generally aren't spending a lot of money on maintenance either. 

While it is common for nice houses to go into a tax lien sale it is not common for them to be foreclosed on.

@Chris G That's my reasoning.

I am very new to this, but I have found several just in the last month or so. Some I found by driving my neighborhood. If a property appears neglected or vacant as @Ned Carey predicted, I check an online tax lien site, the auditors' site to estimate how much equity they may have, the scheduled sheriff sales site where the plaintiff is a clue to which are probably tax lien sales, and the Clerk of Courts which shows other foreclosure actions, judgments, etc.

There are a lot of tax lien properties...a whole lot! Some really are in horrible condition! That said, a few are in fairly nice condition and are also in decent neighborhoods. The 15 or so I've chosen to follow up on are in stable neighborhoods, appear to be in fairly good condition, and have tax appraisals between $70,000 and $145,000. (In Columbus, that will buy a respectable home.) Also, they have no mortgage recorded, and the back taxes/ recorded judgment liens are relatively low. Locating the owners is a challenge. Until I can do that I won't know if it is possible to purchase the house before the tax sale at a price that will pay all back taxes, any liens, etc. and allow for reasonable profit after making the repairs.

I was prompted to ask this question because a house near me which I know to have been a very nice house, sits abandoned, the owner apparently having just walked away. The house has no recorded mortgage and there are no other liens that I can find. The tax assessors' appraisal is over $100,000. Efforts to locate the owner are failing, and the Sheriff Sale is imminent. I have puzzled over why someone would not try to salvage some of their equity. I want to find him if for no other reason than to ask him that question.

Hi @Barbara Riley I'm with you.

I'm following up on one that got no bids at the June tax sale. The trustee is coming up with a price and will get back with me. It's one those free and clear properties but it had almost $30k in back taxes. The house is in great condition though.

I was listening to a wholesaling podcast and the guy hires a private investigator to find owners. We might have to do that. I think it was around podcast #42 or so

Some of the properties with a lot of equity could be there because the owner passed away and no one has been paying the bills, or they are rentals and the owner hasn't been paying property taxes for whatever reason, probably just unorganized. Either way, the county wants it back on the tax roll so go ahead and grab the lien/deed as long as it's not a complete piece of trash. Do your research and every now and then you find a gem.

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