Understanding How To Buy A Home In Tax Sale
While buying a home in a tax sale can be risky, it can also help you get more home for your money. So you can best understand the undertaking, here is a quick guide to the two types of tax sales.
- Tax Deed Sale: The property owner neglects to pay his or her taxes. The appropriate waiting period passes and then the property is seized. In a tax deed sale, the entire property is sold at auction to pay back the taxes.
- Tax Lien Sale: These sales are a bit more complicated. They start the same: a property owner does not pay taxes and the home is seized. Rather than auctioning off the whole property, however, only the unpaid taxes are auctioned off at a tax lien sale. The tax collector uses the money earned at auction to pay back the taxes. The highest bidder gets not the property, but just the lien against the home. The homeowner then has to pay the lien holder back, plus interest, or the house can be foreclosed upon. A tax lien sale gives you the opportunity to make a profit off of the interest the lien accrues, with the possibility of the homeowner being unable to pay and you receiving the property if it is foreclosed upon. Bear in mind, though, that with a tax lien sale you usually do not get a full home inspection so you could be assuming ownership of a property with unknown issues.
If you bought liens at an auction and are now in the process of taking over that home or bought a home at a tax deed sale, you should have financial experts come alongside you to ensure everything moves forward smoothly. For all of your escrow services, contact Brighton Escrow in Hermosa Beach, California. No matter how you buy the home, we are here to ensure everything closes efficiently and easily.