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How You Can Benefit from Tax Foreclosure Properties
Any property owner who has not paid taxes on his or her property is liable to having their home foreclosed on. In this case, the foreclosure process is called a tax foreclosure, and any homeowner is eligible for a tax foreclosure so long as its taxes - be they property, income or any other tax - have not been paid. These fees are of the utmost important to most United States Courts; they take precedence over bank mortgages, second mortgages, and home equity loans.
In the world of foreclosures this is the most common type of sale, and the initial benefit for buyers is that the original homeowner cannot bid on the house during auction.
Buyer Advantages for Tax Foreclosures
In the event of a tax deed sale (according to local or state laws), the minimum bid on a foreclosure auction starts at the value of the delinquent tax bill itself, along with fees and costs. This could translate into a very low price, with bids coming in at a fraction of what the house itself is worth.
But there's more to buying a tax foreclosure than just the straight cost. Purchasing a foreclosed home automatically wipes the slate clean of mortgages, tax liens, deeds of trust, mechanic's liens, and anything else that may be a hanging cost over the home. All attributed costs are thrown out the window and you are given the opportunity to reenter into agreements on your own accord. This makes buyers more comfortable with the terms of the agreement, but it also helps them save additional money. They can set up mortgage payments and deeds of trust in any way they'd like, so long as the banks and IRS agrees.
Here are a few other reasons why :
- There are no criteria for eligibility. Anyone can bid on a foreclosed property.
- It's a pretty low investment. You can buy a tax foreclosed home at a rate lower than $1,000. This most notably aids first time investors looking to buy a home at a low cost.
- It's safe. You're working with the government, so nothing too bizarre is going to happen. Plus, there are no risks of defaulting.
- The returns can be very high. If you're purchasing this house as an investment, you're buying for pennies on the dollar. So if you rent it out, or just fix it up for resale, you can make a huge profit.