Tax Foreclosure: Selling Procedures of Properties

Householders who failed to sell their property during pre foreclosure and have failed to meet their tax obligations will lose their homes to the government. The government oftentimes sells properties that it has acquired through tax foreclosure to people who can pay the taxes that are owed, providing an first-class real estate investing chance.. They are sold in transactions known as tax foreclosure sales (or tax deed sales). This is done to recover the taxes that the original homeowner did not pay to the government.

In selling tax foreclosure properties this way the government offers the unpaid taxes, the liend, the interest for those sus, and the selling costs involved to interested investors in a public auction. In case there are many prospective buyers of these liens, the winner is granted the property in any of the following methods:

-The interest bid down method – The government fixes a maximum rate of return and the bidders have to stay within that rate limit specified. The investor accepting the lowest rate of return among the bidders is declared winner of the tax foreclosure property. In cases of ties on the bids, the impasse is solved through a random or rotational method.

-Premium Method – During this method, a real estate investor who is willing to pay the highest premium on the lien amount is declared the winning bidder. This method is used and preferred in some parts of the country for selecting the winner at an auction.

-Rotational Selection Method – The real estate investor listed first in the list of bidders gets the first offer of the liens in the rotational selection method in the auction. In case he declines, the offer is made to the investor next in line and so on. The first bidder, who declined in the first round, is offered another lien only after an equal chance has been given to all likely investors that are included on the list.

-Random Selection Method – In this method in an auction,a random process is used to select the potential investor, ordinarily carried out by computer.

-Bid Down The Ownership Method – The lien in this method given to the bidder who buys the property at its lowest cost. If he buys it at 90% of the property cost, and in case of redemption of the lien by the original owner, this investor would only be eligible for 90% ownership and the remaining ownership of 10% would go to the original owner of the property in question.

Not all liens get sold right away in an auction and when this happens, the unsold liens remain in the hands of the government entity that conducted the auction. It could conduct another auction subsequently. In the meantime that the liens are unsold, the unsold liens are called “struck” liens.

Make sure you fully understand the type of auction you are going to. The last thing you want is to miss out on a good investment because you don’t understand the auction procedures.  If you are interested in learning how to double your income doing what you love, then you need to check out Raymond Aaron right now.

About the author

Sherry Fields Sherry Fields has been working in real estate since 2002. Working with the development team for the Hilton Garden Inn gave her strategic information on the commercial real estate market in Missoula. Broadening her scope she moved into the residential market and earned the designation SFR in short sales and foreclosures. Currently affiliated with Prudential Montana Real Estate, she works with both buyers and sellers "building relationships so you can buy & sell with confidence". Sherry Fields has recently earned the CREN designation - Certified Real Estate Negotiator. While price is a large part of negotiation - it is also about timing everything from the closing date to inspections, appraisals, home insurance - and it is about negotiating items that can show up in home inspections to achieve a mutually acceptable outcome.

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