My husband is actively searching to get involved in buying tax lien properties in Michigan. I'm a firm believer in, if it sounds too good to be true, it usually is. He's got a list of properties with unbelievably low selling prices and also a list of what properties actually sold for last year which aren't too much higher than the selling price. He said his research shows that in Michigan the redemption period is over by the time of the auction so he takes possession immediately and that any mortgage that was on the house is no longer attached to the property. The only liens he has to worry about are EPA liens. So could he truly buy a $200,000 + home for under $2,000? That's what it looks like on these lists. If it really is this "easy," why aren't more people, especially real estate agents, doing this? There HAS to be a catch.

Where is he getting this information? While its partially true, the reality is a bit different.

With the vast majority of properties that are under mortgage, the mortgage carrier pays the taxes from an escrow account the borrower pays into. So the carrier knows if the taxes are delinquent. Do you really think a lender will let a property with a 6 figure mortgage balance get bought up by a tax lien speculator for $2K. Of course not. Mortgage lenders have whole departments that monitor this and they will pay the taxes and add it to the loan balance before they let it go in a tax sale. Also its more likely for a proporty to be foreclosed on way before the county puts it up for auction for back taxes.

This doesn't mean there aren't properties that get auctioned off. But generally these properties are abandoned and in poor condition. So they would require an investment in time and materials to get them to be saleable.

I don't agree with Scott. While most properties in tax sale are run-down, many properties have or had mortgages that were wiped out or will be wiped out in the process. With the mortgage mess we are having now, they cannot keep track of their investments properly in some cases, and fail to pay the taxes.

To answer your question more directly, many investors know about tax deed sales and will be at the sale to bid the property well above the $2000 mark in the case of a $200,000 property. Therefore most bargains will be bid up to levels you would not want to pay.

The best way I've found to get tax sale property is to purchase it from the owner before the tax sale occurs. You'll get unwanted property all the time that you can get from the owner for as little as $10, subject to the taxes owed. If they don't want the property, many times they're happy to get it out of their hair for a token payment.

The real issue is that almost no property with a mortgage from a lender will go to auction. And some are OK properties, but on the other had a property worth 200,000 is first going to have normally taxes due for more than 2000. Since most con't sell till at least two years are do and often three years. And of course it is unrealistic to believe that many people will sign over a home for 10 dollars,

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Originally Posted by deedgrabber

I don't agree with Scott.

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I'm having a hard time trying to find out where you disagree with me. I said; "these properties are abandoned and in poor condition". You said; "While most properties in tax sale are run-down". Doesn't seem much disagreement there. We also both agree that the reality is different from the hype the OP is getting.

But the bottom line here is that if there is a mortgage on the property, the likelihood, that it will go in a tax sale, is extremely small.

I also agree with your, that the best way to do this is to find an owner who is being threatened with losing their property due to delinquent taxes and make them an offer. Finding such properties, however, is not easy.

Scott while he is within the bounds, he is dragging every tax sale post for months up, using a cut and paste last paragraph or two . He is selling his book on doing these sells.