Real Estate Coach · Richmond, VA · Member since 2014 · 19 posts · 6 votes
Question for the panel: I have a guy that inherited a house that has a lot of taxes on it. The taxes are more than the property is worth at this point. Anyway, all of the taxes were incurred by other family members before he inherited the property. The guy is interested in selling and at a discount but this would not cover the amount of taxes owed on the property. Has anyone ever been in a situation like this? Is there anyway around buying a property that has a lot of taxes owed?
Property taxes won't be negotiated. If you're talking IRS liens, they can be released "from the property only" for a negotiated amount, but they get the money, instead of the seller.
first, I agree with @Wayne Brooks. If it is property taxes, your stuck. But if it is IRS or state taxes, they can be negotiated.
In this situation, it is my recommendation that you work out your contract to be the one who benefits from the negotiation.
The way I frame the offer and then the contract is to simply ask the owner, to forget the taxes, liens and encumbrances and just tell me what they need for themselves.
They key is that even though they are told not to consider the liens, they still do and thus are pretty economical with that number.
Then, write your contract as, "payoff of all liens plus blank to the seller."
By doing this, you will be the one to benefit from the negotiations.
(Ex: without my way, 100k purchase price with 90k in liens. If you negotiate the liens down to 45k, the price is still 100k... VS. payoff of liens plus 10k to seller: the 45k discount reduces the amount of money you have to put into the deal as the amount to seller remains the same)