Tax foreclosure auctions are likely a very interesting place for small investors, or anyone for that matter, to purchase a house at low cost. The trouble is that most people know nothing about this alternative to the regular open market.
But if you put a little effort and make some inquiries about tax foreclosure auctions, you will see that virtually every US city holds auctions focused on foreclosed homes for sale. These auctions are open to everyone and anyone can put bids on foreclosed houses without having to pay extremely high prices.
Taxes and government foreclosed property
As we all know, the law says that house owners must pay property taxes on their homes. Nevertheless, not every homeowner can pay or actually pays those taxes.
So what happens when homeowners do not pay property taxes as scheduled by law? When this occurs, the government is entitled to repossess any tax delinquent properties and put them for sale at tax foreclosure auctions.
If you inform yourself about the date and place where these foreclosed houses are put up for sale, you can then make bids at the tax foreclosure auction and acquire the foreclosed property if you win the bid.
Different states, different tax foreclosure auctions laws
Every state has different laws that limit and regulate sales of properties and foreclosed property in each state. So, before you rush to acquire foreclosed homes for sale at tax foreclosure auctions, you should educate yourself about the laws and rules in effect in the state in which the auction takes place.
In some states buyers have to hand the full purchase price on the same day of the auction while in others you may have to consider other requirements and, at the same time, they give you specific time frame to pay for the foreclosed property you acquired at the tax foreclosure auction. As you may realize, it is paramount that you know the exact rules in force before putting any bids.
Foreclosed houses and rights of the homeowner
Another issue that you should always keep in mind is that the homeowners themselves may have redeemed many foreclosed homes for sale at tax foreclosure auctions before the date of the auction. Therefore, there will be properties that will not be actually sold on the day of the tax foreclosure auction.
What is even more important to remember is that the homeowner may still have certain rights on the real estate. House owners could be entitled to redeem the foreclosed property even after the tax foreclosure auction has taken place. It is thus essential that you research this matter extensively before putting any bids.
Individual states can set different minimum prices for foreclosed homes for sale at tax foreclosure auctions. Should it happen that nobody matches the set minimum price, the same house might be auctioned again in the future.
Tax foreclosure auctions are not limited to insiders, anyone has the right to attend them, but it is necessary to gather all the necessary information about tax foreclosure auctions before putting any bids.