If you want to buy a home for back taxes, there has never been a better time than the present. Here’s a step-by-step guide that shows you how to buy a home for back taxes without going to the auction and for the lowest possible price.
1. Wait until after the tax sale and then check the results. Everyone and their brother want to buy a house for back taxes these days, and they all end up at the auction. Do yourself a favor and skip the auction. Once you’ve been approved, check the results and see which properties were “hot” and got a lot of offers. The ones that didn’t are probably worth nothing.
2. Contact property owners about nine months after the tax sale. They’re giving a one-year grace period, and during that time, many of them will pay the taxes. Those who don’t are in a bind: they either need to sell fast or they will lose their capital entirely.
3. Find out what your plan is. Some will be ready to sell at this point. Others have already decided to just “let the property go” and have moved on. These owners are a treasure for a new tax investor. Ask them if, since they have already decided to leave the property, they would be willing to sign the deed for you so you can see if you can do something with it. If you want, you could even offer them some of the proceeds, if you can make money from it.
You’ll be surprised how often they’re on board with this idea, especially if you’re candid about what you’re doing and the fact that you’re very new to home buying. It makes people feel good, especially when they’re in a bad situation, if they feel like they can help someone else, like you.
4. Quickly pass the property on to another buyer or investor. Since you’ve only invested a small amount of money, if any, you can afford to sell the property to someone else and make a few thousand in profit (instead of worrying about selling for retail value). Or, if you want to sell for as much as possible, pay the taxes yourself and start selling the property.
If you want to buy a home because of back taxes and aren’t swimming in seed capital, this is the easiest route to your first purchase. However, you will probably quickly become addicted to this tax property investing method!