In Atlanta, Does anyone buy Tax Deeds for Flips or Wholesales?

Question

Hello!

I got a call from a lady who owes back taxes on her property, the tax deed sale is set for 2/2/16. She wants to know can I help her. She is not opposed to selling her home as long as she can get some money out of it.

Any advice on the best way to structure this?

If it goes to the tax deed sale and someone buys it can I still work a deal?

Do I need to find a buyer that will cover the lien?

What form of paperwork should I have her sign?

Thanks!

I

Account Closed · Answer

Technically, the owner will not have title to the property to sell to you if the property is sold at the tax sale. The tax deed conveys title to the purchaser, subject to the owner's one year right of redemption. The tax deed will go somewhere close to market value (likely in the neighborhood of a 10-20% discount) and you have to pay all cash on the day of the sale.

IMO, the only way this will work with any sort of certainty is if you get the house under contract, pay off any lien(s) before the tax sale tomorrow, and then close a traditional sale with the owner (or wholesale it).

There are a lot of moving parts with this and I would not recommend this type of deal for anyone other than an experienced investor with significant cash reserves to potentially pay off additional liens, etc.

Account Closed · Answer

The first step is getting the tax sale cancelled, which will require an investor to pay the back taxes. The only way someone will do that is with a contract to purchase. So you also need to come to a price with the owner that you can market to investors. Time is awfully short. Even if this particular deal doesn't work, this strategy is a reasonable way to find motivated sellers/future deals.

If the property goes to tax sale, it is over. The owner will have to pay the back taxes plus 120% of the sale price to the purchaser of the tax deed.

Richard Balsam · Answer

You could always let the tax sale happen if you are out of state, and purchase from the current owner with extremely favorable terms, since a tax lien is in first position on the house. It will cost you a bit more due to the lien, but maybe you can take over the home subject to, and once you pay off the investor ( and make sure you get a release of lien filed)- you will only have the original first lien being the mortgage on the property.

I have a property that I bought at a foreclosure auction. Never knew that the tax sale was on the same day. Another investor bought the tax lien while I bought the house. After two years - I received a "last chance" letter that they will be foreclosing next month- and the payoff was $3800 - or lose the home. Never knew of this lien- in fact, it wasn't even recorded against the property! But...I could not take the chance that it was fake. It was from a huge company that buys 100's at a time directly from the county - bypassing the tax auction ( yes- once the papers found out about the sweetheart deal they made- it was put on hold for a while). But this was the same company with our house lien. I ran to their location with check in my hand, and tail between my legs - and they did mail me a release of lien certificate ( had to keep calling to get it). Still have the house 10 years later cash flowing with lease option tenants. So - it can be done, and lien removed. Even at 18% interest, if you payoff the investor within a few months - the interest is still small. Good luck with this!

Jynell Berkshire · Answer

Angel,

I presume the tax sale is in Atlanta since you are from there. Correct?

First, is the tax sale a "tax lien certificate sale" or an actual "tax deed sale"? It sounds as if it is a tax lien certificate sale. Presuming it is a tax lien certificate sale, what is the right of redemption period? Most lien certificate sales, like what Adam was referencing, require the property owner to pay the taxes within a specific period of time, plus interest to the tax sale buyer. In many jurisdictions, such as the State of Indiana, the former property owner may have rights to claim the surplus once the owner's rights divest upon the issuance of the tax deed to the tax sale lien certificate holder. Although the tax sale buyer may be the purchaser at the sale, the purchaser can assign the certificate over to another third party as well.

I file a great deal of litigation in the State of Indiana on behalf of the former property owner to claim any surplus proceeds once the owner's interest divests. Of course, this is assuming surplus proceeds exist, the property owner doesn't want their property any more, and the tax sale lien certificate buyer actually petitions the court to receive the tax title deed.

Of course, you can purchase the property directly from the property owner during the right of redemption period (assuming lien certificate jurisdiction) but you would need to pay off any liens, judgments and encumbrances, similar to a traditional straight sale.

Best of luck!

Account Closed · Answer

Georgia is a tax deed state.

Tom Yung · Answer

@Angel Troupe

When home owner owes back taxes on their homes. Usually there are more issues than just back taxes. Those can be other liens and mortgage. Unless there are sufficient equities  on the property to cover the other liens & mortgage. It is very seldom you have a WIN WIN situation for you and the owner.

If there are equity in the property. Just act like a normal sale. Pay off all the liens & mortgage.

Angel Troupe · Answer

Thank You so much for all of the responses.

Yes, The property is in Atlanta and Georgia is a Tax Deed state, so does that mean that all sales are Tax Deed Sales? No Tax Lien certificates correct?

I know the home does not have a mortgage on it but I am not sure about other liens.... I am guessing I need to check with the city in regards to that.

I do know also about the excess funds that the owner can claim if the taxes are bid up at the actual auction, but if I purchase the property do I become the owner of the excess funds or would that be for the previous owner?

In Atlanta, Does anyone buy Tax Deeds for Flips or Wholesales?

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