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Why is a tax sale necessary in the United States, you ask? Since our country has existed, our government has depended on local taxes to pay for the municipalities that your town or city needs to function. Our roads, schools, public places and services such as garbage pickup and fire stations are funded by the citizens paying their taxes. When a person decides not to pay the taxes that they owe, the government has the power to take control of assets to pay for the money that is owned. What usually will happen is that the government will levy taxes against the property owner, placing the owner's debt for auction. There are two types of auctions, a certificate auction and a deed auction. While the both offer the opportunity for the bidder to eventually take ownership of a property, they both function in different ways. A tax certificate sale is a public auction that results in the delinquent taxpayer's debt being sold to the highest bidder. These auctions are only held on a county level and usually take place once a year. If you're looking to bid in one of these auctions, the information can usually be found on local government websites. If you win one of these auctions, you're basically loaning money to the delinquent owner to fulfilling their take debt. If the former owner not able to pay off the debt by a designated amount of time, you then take over the right to the property and are responsible for paying off any future taxes. If the tax sale is for a deed, you're bidding on a literal deed to the delinquent taxpayer's property. Keep in mind that all parties involved have been notified well in advance about the auction, and the previous owner has been given the opportunity to pay back any money owned so they can remain as an owner of the property. Foreclosures don't happen overnight, so remember, there has been an extensive process that has already happened before the auction has even been announced. The difference between this and tax sale certificate is that you're buying the property outright instead of offering a loan to the delinquent property owner. Buying the property outright lessens the risk, as you will be guaranteed ownership instead of waiting to see if the former owner can pay back the debt. You will, however, be forced to float more money in advance if you win the deed auction. As you can see, these kinds of auctions can be worth the investment if you have the money to bid. Make sure that you do a thorough inspect of a property first before deciding to make the investment. Always assume first that there's a major problem with the property that needs to be fixed through major renovations. Also, make sure you learn the rules and regulations of how your state handles auctions. If needed, consider the aid of a lawyer to help you with the property auction process. By being prepared, you can benefit greatly by investing in a tax sale. A tax sale offers unique advantages to savvy investors. Find out how you can benefit by consulting with the professionals at CivicSource. For more information, visit: http://www.civicsource.com
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