When property taxes go unpaid for a certain length of time, the taxing authority may auction the property off to satisfy the tax debt. Nearly anyone may buy a property at a tax sale, with a few exceptions, such as the tax collector who is holding the sale.
Property tax auctions are often excellent opportunities to purchase real estate at a discount. The sale price for auction property is often below market value. As a buyer, you assume a degree of risk in exchange for that discount. These tips may help you prepare for a tax sale.
1. Find available properties
The taxing authority holding the tax sale typically maintains a list or website containing tax sale information, including property addresses, sale dates and other relevant details. You can find the tax sale list for Los Angeles County on the county treasurer’s website.
2. Research the properties
The due diligence process for purchasing a property at a tax sale is different from the process you would normally encounter when buying real estate. Try to learn as much information as you can about a property before the sale. Failure to fully research a property may lead to property disputes and other problems.
3. Determine the minimum bid
In a tax sale, the starting bid is the total amount of unpaid property taxes, plus interest, sales costs and other fees as required by law. The tax collector will not sell the property unless you or another buyer meets this bid.
4. Follow up the night before
Property owners have the right to pay the delinquent taxes and save the property from auction. If the owner redeems the property by 5 pm on the evening before the sale, the tax collector will not sell the property.
If you are considering purchasing a property at a tax auction, always take all necessary precautions to be sure the property is worth the investment.