Tax Deed Investing - What is an "Upset" Sale?

In Pennsylvania, some counties have two different tax sales; the "upset" sale, and the "judicial" sale. If tax sale properties are not sold at whether of these two sales, the asset then goes on the "repository" list and can be sold by incommunicable bid. The upset sale is held every year in the fall. It's called an "upset" sale because the minimum bid for the properties in this sale is known as the "upset" price; which includes any unpaid taxes from the county as well as any municipal liens. If a asset is not sold in this sale, it is sold in the "judicial" tax sale in the spring. Not all Pennsylvania counties have judicial sales but they all have an upset sale.

What you may not know about the upset sale is that all properties are sold field to any liens or judgments. That means that if you buy a tax deed at this sale, you are responsible for any other unpaid liens or judgments on the property. Most people assume that when they buy a asset at a tax sale, they don't have to worry about other liens such as a mortgage. This is not true at the upset sale. If you plan on bidding at any of these sales this fall, you'd best do your homework!

Knox County Property Tax Sale

So how do you find out about other liens or judgments on tax sale properties? There are two ways that you could do this; one is going to cost you some money and the other is going to take some of your time. The first way is to hire a title search business to do a simple title search on all of the properties in the sale that you are curious in bidding on. This could turn out to be a microscopic costly, so it's not my recipe of choice. Another presume why I don't hire a title search business to do title searches for me before the sale is that many of the properties will come off the sale list the day before or the morning of the sale. You may pay for a few title searches that you don't even need because the properties that you wanted to bid on are not sold at the sale.

Last time I went to the Monroe County Upset Sale, I didn't even bid on any properties. I researched about 10 of the properties in the sale that were in an area that I was curious in. Through my research I narrowed this down to only two properties that I wanted to bid on. I did all of my research the day before the sale and I had checked that morning to make sure that all of these properties were still in the sale. But by the next morning (the morning of the sale) the two properties that I was curious in had paid and were no longer included in the sale. I'm glad that I did my own research and did not pay a title business to do it!

That brings us to the second recipe for finding out about liens and judgments on tax lien properties, and that is to do it yourself. There is a microscopic bit of study and some time involved, but it is well worth it. In most states, to do this type of research you would go to the County Hall of Records. In Pennsylvania the office that has the records that you need to search is the office of the Prothonotary. The people in this office are normally very helpful and will help you to look up what you need to know. You'll have to look for liens and judgments by the name of the owner. If there are co-owners or joint owners, you will want to search under both names.

Keep in mind, however, that if new liens were not yet recorded they could slip Through the cracks in the law and you won't be able to find them. There is all the time some degree of risk when you buy a tax deed, even if you are rigorous and do your homework. This is why it is all the time recommended that you do not buy tax deeds in your own name, but in the name of a isolate entity. It could be a corporation or an Llc. If you need help forming a corporation or Llc for the purpose of buying tax deeds, I know of two perfect programs to help you. They were both created by Darius Barazandeh, Texas attorney and tax deed expert.

Tax Deed Investing - What is an "Upset" Sale?

The Truth About Tax Lien Investing

What is tax lien investing anyway and why is it such a good investment? What is the discrepancy between tax lien and tax deed investing and what are some of the misconceptions about this type of investment? Read on the find the answers to these questions...

Counties and municipalities depend on money from asset taxes to meet their budget. When asset owners don't pay their taxes, the county or municipality will sell the taxes to an investor. The investor is not buying the asset but paying the taxes on the asset and putting a lien on the property. Why would an investor want to do this? Two reasons; first they are getting a good interest rate on their money and secondly a tax lien comes before most other liens, so the investor is likely to get paid.

Knox County Property Tax Sale

In some states, when a asset owner does not pay their taxes, instead of selling a lien on the property, the county or municipality will sell the asset at a tax deed sale. In states that sell tax deeds you are well buying the property. In some states the asset is sold for back taxes and penalties, in other states the asset is sold for a obvious percentage of assessed value and in other states the asset is sold at market value. A tax deed can be a good investment, especially in states that sell the asset for the back taxes because the investor has a occasion to buy real estate at under market value.

Some states sell redeemable tax deeds, in which the county does sell the deed to the asset at the tax sale. But there is a redemption period in which the delinquent taxpayer can come back and redeem the property. In order to redeem the asset the delinquent taxpayer must pay the investor either a penalty or interest on their investment. Some redeemable deed states have a penalty and some have an interest rate. In some states the penalty or interest can be quite high, manufacture it very inspiring to the investor.

Because people have been told that tax liens are a great speculation and that they can make such good interest rates, they assume that interest is paid out by the county or municipality on a regular basis. The truth about tax lien investing is that you do not get paid a cent until the delinquent asset owner decides to redeem the lien. If they do not pay while the redemption period (which is different for every state) then you can foreclose on the asset in order to get paid on your lien.

Another misunderstanding about tax lien investing is that after the redemption period is over, the lien holder will automatically get the deed to the property. The truth about foreclosing on a tax lien is that in most states you need a lawyer in order to foreclose and get the deed to the property, and in other states (Florida for example) the asset will be sold in a tax deed sale, and will be auctioned to the highest bidder, so your chances of arrival away with the asset for what you have invested in it are not good.

Some people have the misunderstanding that tax lien investing is a good way to buy properties for pennies on the dollar. This does not happen very often. Especially in states where the value of real estate is very high, the tax lien will almost all the time redeem sometime while the foreclosure process. Tax lien investing is a way to get a high return on your money. If you are concerned in buying asset for under market value, you are better of with tax deeds or redeemable tax deeds.

The Truth About Tax Lien Investing

Investing in Alabama Tax Liens and Tax Deeds

In all 67 Alabama counties, asset taxes are due October 1 and come to be delinquent on January 1 the following year. Once asset taxes come to be delinquent for a property, a tax lien is settled on the asset until the taxes are paid in full by the asset owner. All Alabama tax lien sales take place in late April or early May. In Jefferson County alone, Alabama's largest county, over 4000 tax lien certificates worth over million are sold. In the State of Alabama, the guaranteed interest earned on a tax lien certificate is 12 percent per annum, starting the day of the tax lien sale.

Generally, the tax lien sales are held on the county courthouse steps and the selected bidding formula is used. In a selected bidding method, each asset is started at the minimum bid, which is usually the sum of asset taxes, the accumulated interest on those taxes, and any sale menagerial fees, such as advertising the tax lien on the asset in the local newspaper. starting at the minimum bid, investors take turns bidding up the tax lien certificates until there is only one investor remaining who is willing to pay the top "premium" on the tax lien certificate. Most Alabama county tax auctions start on a Monday and they will continue on consecutive days until all land parcels have been publicly offered.

Knox County Property Tax Sale

The purchaser of a tax lien certificate has the right, but not the obligation, to pay subsequent asset taxes on the asset each October 1. If the investor allows the subsequent taxes on the asset to come to be delinquent, the tax lien certificate (in the amount of that year's taxes) will be offered again in the April or May sale. If the purchaser holds on to the tax lien certificate, pays all subsequent asset taxes for a full three years following the initial tax sale, and the asset owner (or other concerned party) does not redeem the asset (pay all accumulated taxes), the tax lien certificate possessor has a right to the tax deed on the property.

All tax lien certificates that did not receive any bids at a county tax sale are assigned to the State of Alabama. These tax lien certificates are often referred to as Over-the-Counter (Otc) or Assignment Purchasing liens. The same "redemption period" is used for these tax lien certificates, which means any tax lien certificates that have been in State account for over three years will be offered as tax deeds. Both tax liens and tax deeds in Alabama's state account are available for buy by any hidden investor. For an Otc tax lien/tax deed list from every Alabama county, go to the Alabama branch of income asset Tax page.

An investor must submit an application to the State for each asset for which they have an interest. An investor may submit as many as 20 applications. Instructions and application forms are on the page referenced above. The lists are updated at least once a week. Like any investment, it is important that any investor does their study and due diligence on each property. If a land parcel stays in the State's account for more than five years, it is a possibility that an investor can gain the tax deed to this asset for less than the amount of taxes due.

Unlike some other lien states in the United States, tax lien certificates turn into tax deeds after the three-year redemption period without the tax lien certificate possessor having to start the foreclosure process on the property. Instead, this tax deed received pursuant to the Alabama process is the ensue of an menagerial foreclosure and does not warrant a marketable title. So, a quiet title operation may be required to gain an insurable title.

To give you an idea of some counties you may want to invest in, I will give you the five most populated Alabama counties below: Jefferson County - 656,700 Mobile County - 404,157 Madison - 304,307 Montgomery - 223, 571 Shelby - 178,182

There is surely a lot of chance when it comes to tax lien and tax deed investing in Alabama.

Investing in Alabama Tax Liens and Tax Deeds

Houses With Unpaid asset Taxes - A Unique Investing opening

If you've been investing in mortgage pre-foreclosure homes with wee success, you may want to look into switching up your game plan and investing in houses with unpaid property taxes instead. Why? One straightforward reason: they rarely, if ever, are encumbered by a mortgage.

Houses with unpaid property taxes that make it all the way to tax sale have a few things in common.

Knox County Property Tax Sale

First of all, they've had ample occasion to be "saved" by their mortgage companies. Normally, if a house has unpaid property taxes and is in danger of being sold at tax sale, the mortgage company will come in and pay the taxes to avoid losing their stake in the property. More often than that, mortgage payments consist of property tax- so those houses would never end up with unpaid property taxes.

Secondly, the taxes have been unpaid for quite some time. Although there is state code governing how long a property can go with unpaid taxes before being sold at tax sale, often they go much longer due to the discretion of the county (sheriff, clerk, tax commissioner, etc). Once taxes have gone unpaid for that number of time, we can guess the owner isn't planning on paying them off, or that they don't have the money, or simply don't have a clue that the property will be auctioned off. (Sometimes, they aren't even aware that they own the property at all!)

Finally, the most leading thing they have in base is that they are a lucrative investment opportunity. While investing at the actual tax sale isn't all the time a great way to get a deal on houses with unpaid property taxes, due to the competition from other bidders, you can often get these properties directly from their indigent or uninterested owners for token amounts. They key is to feel them just before the property is going to be lost forever, when they've got nothing to lose by selling to you.

Houses With Unpaid asset Taxes - A Unique Investing opening