Why Are Tax Lien Properties For Sale?

Many individuals wonder about all the tax lien properties for sale. They often wonder how and why these dwellings have come up on the market. When they see these available listings, investors and potential homebuyers wonder if this is a wise way to purchase real estate. Because of the housing bubble’s burst and difficult economic circumstances being suffered across the nation, there are foreclosures and repossessions of all kinds. Here are some things to think about:

What are they? Tax lien properties have been put on the market because they were seized by the government to pay back taxes. Property taxation that becomes delinquent causes a hardship for the county where the homes are located. Most mortgages are PITI which means payment including taxes and insurance. This means that the monthly payment amount that a lender collects includes principal, interest, property taxes and home insurance. The lenders keep their portion and send the remaining dollars to the appropriate place, i.e. the county treasurer or insurance company. With all the mortgages that have gone into foreclosure, lots of taxes have gone unpaid as well. In order to pay off this debt, the county treasurer issues an order to sell the places to pay the delinquent balances.

What do property taxes cover? Every homeowner has a stake in the community and pays their fair share to cover costs. Some items paid for out of this pool of money include public schools, road maintenance and construction, the upkeep of parks and landscaping, public libraries, police, sheriff and fire departments. All of these items come with a hefty price tag in terms of salaries, vehicles, tools and more. Many individuals may take these services for granted but they shouldn’t. Having access to education, parks, streets, libraries and protection via police and firefighters is a wonderful privilege that adds to quality of life. These items also add to houses’ and neighborhoods’ property values. It is for these reasons that it is every homeowner’s right to pay their fair share. When they don’t, for whatever reason, their assets must be sold in order to foot the bills.

Good investments? Whether or not these homes are good investments will depend on the individual situation. Each piece of real estate that is sold in this manner is being done so on an “as is” basis. That means that the homebuyer is taking the flaws with the perks. The tax liability will be taken off the top, as well. Any structural or cosmetic defect repairs will come out of the buyer’s pocket. These dwellings have no guarantee as to their habitability or soundness. A wise investor will check over the available real estate with a fine tooth comb before signing on the dotted line. Is the roof in good shape? Is the foundation solid? Is it in a good neighborhood? If not, buyers better beware.

Cash basis: Bids are made and the properties go to the highest bidders. There is no finagling with banks once the bid has been won. The buyer must be prepared to hand over the cash or lose the sale.