Approaching property owner about tax lien

9 Replies

Does anyone have any experience in investing in properties with tax liens? I have found a vacant house with a tax lien on it and am looking to contact the owner to see if he is interested in selling. Does anyone have any advice regarding best methods of contacting the owner, to see if they are interested in selling? 

Thanks!

I start with a letter to where the tax bill is going and hope for a phone call.

If that doesn't work I start googling them to try and find a better address or phone number.

@Benjamin Misner this situation is no different than any other deal. There is no need to approach them in any special way. I think it is best to call. Mailing is a distant second choice.

Step one - find out who the owner is. Tax or land records should show this. Next you need to find out how to contact them. Hint they may not be at the address of the tax records. This means doing a people search or "SKIP TRACE" as it is called in the business. 

The tax lien may mean the owner is motivated to sell, Or it may not. Just because someone should be motivated does not mean the are motivated. 

Originally posted by @Ned Carey :

@Benjamin Misner this situation is no different than any other deal. There is no need to approach them in any special way. I think it is best to call. Mailing is a distant second choice.

Step one - find out who the owner is. Tax or land records should show this. Next you need to find out how to contact them. Hint they may not beat the address of the tax records. This means doing a people search or "SKIP TRACE" as it is called in the business. 

The tax lien may mean the owner is motivated to sell, Or it may not. Just because someone should be motivated does not mean the are motivated.

 Thanks @Ned Carey, this was helpful!

@Benjamin Misner --as creepy as it may sound, before you call - research the owners. If the county has records online, find out if other liens are on the property. This points to motivation. Does the tax bill go to the same address as the property you are looking at? No? Then look up the address the tax bill is going to. I once found a lien on a property that was a second home for the owner. I looked up his original address in a different state and he had outstanding RE tax lien on that property too. I wasn't interested in buying, but I knew the lien had a slightly better chance of falling to foreclosure on the second home. He eventually sold both homes before the foreclosure period but I also earned a good amount of interest as a consolation prize.

Google the name of the owner, Google the name of the spouse (if their is one). Look for divorce records. Recent divorce or death? Might point toward motivation. Check Facebook, LinkedIn; owner working? Retired? Looking for work? You got it, possible motivation. You reveal nothing of your research to them - that would definitely creep them out. But the more reasons you find for them to be motivated, the better you know if you should develop a contact schedule if they are not open to selling at the beginning. The longer they go and nothing changes lien-wise, the more they may become motivated. The better relationship you have with them, the better chance they will eventually go with you for a deal. Good luck!

Originally posted by @Jerry K. :

@Benjamin Misner --as creepy as it may sound, before you call - research the owners. If the county has records online, find out if other liens are on the property. This points to motivation. Does the tax bill go to the same address as the property you are looking at? No? Then look up the address the tax bill is going to. I once found a lien on a property that was a second home for the owner. I looked up his original address in a different state and he had outstanding RE tax lien on that property too. I wasn't interested in buying, but I knew the lien had a slightly better chance of falling to foreclosure on the second home. He eventually sold both homes before the foreclosure period but I also earned a good amount of interest as a consolation prize.

Google the name of the owner, Google the name of the spouse (if their is one). Look for divorce records. Recent divorce or death? Might point toward motivation. Check Facebook, LinkedIn; owner working? Retired? Looking for work? You got it, possible motivation. You reveal nothing of your research to them - that would definitely creep them out. But the more reasons you find for them to be motivated, the better you know if you should develop a contact schedule if they are not open to selling at the beginning. The longer they go and nothing changes lien-wise, the more they may become motivated. The better relationship you have with them, the better chance they will eventually go with you for a deal. Good luck!

 Thanks this was really helpful!

First, do your own title search. NEVER, and I repeat NEVER depend on county tax records as evidence of ownership. I own a curative title company and we do title searches all across the country and these records are wrong about 30% of the time. Also, before you buy, make sure you have a grasp of all the liens that may come with the property that are not necessarily recorded. Depending on the jurisdiction, liens and ownership interests can be held on a property and not recorded in different formats such as in courts, by cities, taxing athorities such as federal and state entitites. Know how to research those out. Also make sure you've checked through Pacer to make sure they don't have a bankruptcy pending, those can discharge tax liens on real estate. If the owner is behind on property taxes, usually there are other liens out there. That being said, if there are liens on the property, learn how to strip those liens and utilize those liens in your negotiation in price. I usually try to buy properties with liens in place, such as judgments, tax liens from the IRS, medicare etc. I utilize the liens to reduce the purchase price and then after closing, strip the liens, usually for nothing or for a fraction of what was owed.  

As far as approaching the owner, there are several ways to do it. I always start with a conversation on the phone. If they are not interested in selling the property, I'll offer them a loan to pay the back tax. The method I offer them is a QC deed over to my holding company, then a lease option back to them to repay the loan at a normal interest rate. In my experience, about 80% of them default on the lease option and I still end up owning the property for the back tax amount. If they are not interested in the loan or selling, I make a note of the property with my notes on it on a tickler calendar and recontact them about 30 prior to the end of the expiration period to pay the tax. Usually they are more favorable to a loan when their time is starting to run out.