Finding a tax lien property for sale is pretty easy. Finding a property that is worth buying, especially in today’s economic climate, is a bit more tricky. My goal with this brief article is to show you 3 different ways to find pending tax lien sales worth buying… and how to find them for free.
But first, the basics…
What are tax lien sales?
A tax lien sale is when a government agency auctions off any tax liens against a property to recoup any delinquent taxes against the property. These sales are usually conducted by the tax collectors office or the sheriff’s office.
It is important to note that there are two different ways for the government to collect delinquent taxes. One would be this type of sale (tax lien sales), and the other is known as a tax deed sale.
In a tax lien sale, the investor is buying the lien itself. The winning bidder will receive a certificate at the end of the auction that entitles the investor to collect payments for the delinquent taxes, often at a high interest rate. This certificate also allows the investor to foreclose on the property after a specified redemption period if the taxes remain unpaid.
In a tax deed sale, the real estate itself is put on the auction block. The winning bidder takes possession of the property in the form of a tax deed.
Whether your goal is to invest in tax liens or to bid in tax deed sales, the first step is the same: Identifying properties that have tax liens against them.
Where are tax lien records maintained and recorded?
More times than not, tax liens are filed and maintained at the state level. This means two things for you as an investor:
1. There may be a bit more legwork involved (these databases are seldom on the internet) 2. If there is more legwork, there is a much higher chance that you will find worthwhile properties
Generally speaking, the easier it is to find an investment opportunity, the less valuable it is. As my mentor always told me… “Always look for problem properties… and look where nobody else is looking.” The best deals are always the ones not many people know about, or the ones that not many people know what to do with.
With that said, this is…
How to find tax lien properties in your state
1. The county recorders office
This is the most time consuming strategy, but is very accurate. Every county in the U.S. has a place where public record is recorded. This would include things like deeds, wills, notices, mortgages and both federal and state tax liens.
Many times there will be a computer on site where you can search across the records. Doing a search for something like “tax lien” will usually uncover a vast list of properties that you can then pay to print out.
2. Tax collectors office
The tax collector usually maintains a list of properties that are going into tax deed sale as well as properties the state is offering tax lien certificates against. Give them a call to make sure they maintain such a list, and it isn’t held at the Sheriff’s office. Then ask what the procedure is to get one of these lists. They may give you a bit of a hard time; simply remind them that this information is public record and you should be all set.
3. Local Newspaper
As part of the sale process, the county must give “public notice” of all upcoming tax sales. These are always either before or after the classifieds. Go through this section religiously… it is your new golden goose. Make note of the properties that look interesting, and do your due diligence from there.
4. Subscription based list services
This is the only strategy that will cost you some money… which is why I didn’t mention it earlier. Consider it a bonus.
Honestly, these types of services are a dime a dozen. Some are better than others. The biggest benefit is the speed that you get access to the information. Always look for ones that update often; generally speaking, locally based websites are better than national ones. If you do a basic search on Google you’ll get a list of plenty to choose from.