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Tax
Lien Due Diligence
Don't
go into a tax lien sale blind, do your tax lien due diligence.
Make sure to complete as many of the following items as you
can before the tax lien sale occurs.
- Obtain
an updated copy of the sales list a few days before the
sale. Owners will pay off their taxes owed any time up until
the final sale occurs. You may show up at a sale expecting
to bid on certain liens, only to find out the owner paid
off a week before the sale occurred.
- Check out the file for the property at the county office
or online if you can.
- Determine
what class of property it is; residential, commercial,
farm, vacant, etc..
- Check
if there is a mortgage on the property
- Find
out how the property is zoned and what is needed to build
on it. How large, how much road frontage, sewage, etc...if
you get a vacant lot, and no one redeems, no one will
buy it if you can't build on it.
- Find
out what the property is assessed at and what the annual
taxes on it are.
- Locate the physical address and go and check out the property.
- Make sure you know the payment methods and come equipped
to pay.
All
this work sounds like you are checking the property out to
purchase it. But really what you're doing is checking the
property out and determining whether you think it's the kind
of property that an owner would pay off the taxes for. And
if the taxes are not paid off you want to make sure it's the
type of property that is worth owning.
What's
the worst case scenario that can occur if you don't do your
due diligence? You may bid on a small plot of grass that nobody
wants. No one pays off the lien and the property becomes yours.
And then no one will buy the property because it is too small
to build on and worthless to everyone, especially you, who
has now lost the money initially invested in the lien because
you never bothered to check out the property and find out
some details on it.
Don't
rush into purchasing tax lien certificates or tax deeds without
doing the work involved in preparing for a sale!
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