Tax sale due diligence. Tax sale due diligence varies on the type of tax sale you are interested in. For tax lien sales, the due diligence is not as in depth as it should be with tax deed sales.
A tax lien is backed by the real estate the lien is against. If the property is not worth the amount of back taxes owed, it is less likely you will get your investment back. When you research the property, find out what the tax assessed value is on the property.
The tax assessed value is not the same as the market value, but it can give you a good idea of whether or not the property is worth the amount owed.
The next step is find out what the approximate market value is of the property. To do that you can call a real estate agent and ask them or you can search real estate listings in that area and see what comparable properties are selling for.
Your main goal for tax lien sales to get a property that will be redeemed.
Tax deed sale due diligence is the same as tax lien due diligence, but more. In addition to determining the value, you also need to be aware of the liens on the property. In most state, all liens, excluding federal liens, are erased at the tax auction.
Check with the local jurisdiction to find out what type of liens are erased and what stays. This is very important to know. If there is an IRS lien on the property and you buy, you are now responsible for that lien.
The counties are required to notify all lien holders prior to the auction. If one party is not notified properly they may be able to buy the property from you or dispute the sale.
The condition of the property you are interested in buying is important to learn. If you are buying land, is the lot buildable or a steep slope. Is the land swamp land? Is there debris on the property that will need to be removed?
If you are interested in a home find out if the it is livable. There have been homes sold at tax auctions that already had a demolition order.
The goal of a tax deed sale is to own the property. Don’t take chances or you’ll lose your shirt. If you want to learn more about tax sale due diligence visit http://BankREOTraining.com
