Real estate investors often have the opportunity to invest in tax lien foreclosure properties as a result of unpaid property taxes. As a general rule, homeowners are equally responsible for paying taxes as they are for making on-time mortgage payments. When someone gets behind on their mortgage, it isn’t uncommon for tax payments to get made in arrears, as well.
When this happens, the original lender and the tax agency has the legal right to take possession of the property and offer it for sale to recover the unpaid amount that’s in arrears.
For this reason and many others, it is always in the best interest of borrowers to make their mortgage payments promptly to avoid Foreclosure proceedings as a result of unpaid back taxes or breaching the original loan agreement.
In some cases, the challenge of paying for missed payments and back taxes can be too much for the homeowner to make up for and they have to let the home go up for auction, a Short Sale, or begin the Foreclosure process.
The procedures for Tax Lein foreclosure differ by state and jurisdiction. Most States follow a simple tax foreclosure process, meaning interested parties can make an appeal the County Court or use other application processes to secure the deed to the property. In States and Jurisdictions with more complicated Tax Lien Foreclosures, interested parties must work with lawyers and the legal system to cut through red tape to buy this type of property, which can lead to lots of time spent in pursuing the opportunity.
Experienced real estate investors who understand the procedures associated with buying Tax Lien Foreclosure homes get the chance to buy these homes and properties at a substantial discount, which gives them a competitive edge in both the buying and selling process. Since these savvy investors have a thorough understanding of their preferred market, they can leverage their cash position to attain these properties when they hit the auction block.
Alternatively, if they work directly with distressed homeowners and purchase the home outright from them with cash, this gives the owner an option of skipping the entire tax lien foreclosure process. As you can imagine, this is a way for owners who have upside down mortgage loans or are having troubles maintaining their property to get out from underneath their loan without all of the stress that a foreclosure process entails.
Millennium Strategic Investments specializes in buying and selling properties in Maryland, Virginia, and the Metro DC area. Call (800) 674-5363 to learn more about making real estate investments in this area.
