Home Owners Nationwide have one consistent bill every year: Real Estate Taxes.
These taxes help the local community maintain things like schools, fire departments, police, roads, etc.
And when you don’t pay them they go out and find someone who will . . . .
The county may offer up a tax lien on your property, where by someone will pay your taxes and then you own them the taxes plus interest. If you don’t pay the lien in a certain time period, then the county will foreclose on your property on behalf of the lien holder. Your property will be sold off to the highest bidder. And in some counties they just skip the whole lien process and go straight to selling your property.
After the sale, the home owner still will usually have a chance to make good during the redemption period, but this can vary by county, so you need to check out the rules where you live.
Want to learn more about the process in your area, the be sure to check out the following links:
If your home or property is up for tax sale soon, what are some of your options.
Find the money and pay the taxes, will buy you some time till next year. Contact the county, in some instances they may have a payment plan and note in some counties, for example Jackson County in Missouri, they don’t sell the property until after three full years of unpaid taxes. So you could go in to the county and just pay the oldest years taxes, and gain some time with out having to pay all the back taxes, just the oldest years taxes and penalties.
If your county has a redemption period, find a way to pay the taxes and penalties during the redemption period and you keep your house.
If you don’t want to keep the property, you could let them sell the property for the back taxes and you get any overages. So if they sell the house and get more than what is owned in taxes, interest, penalties and legal fees, the overages do go to the homeowner, however rather than go this route, you may want to pick option 4 as you would probably get more money and get it faster.
If you don’t want to keep the property, sell it. When you offer it up for sale you will get some dollar amount for your house in the sale. Out of the proceeds of the sale, the taxes get paid first, then any mortgages that are owed, then any other liens and what is left goes to you the home owner. So if your house is worth $100,000 and sells for $100,000 your transaction might look like this:
Sale Price $100,000 Realtor Commission $ 6,000 Closing Fees $ 2,000 Back Taxes $ 5,000 Mortgage $ 50,000
Seller Net $ 37,000
On Option #4, the question becomes how much is your house worth and how much can you get for it. The value of your home is proportional to how quickly you need to sell the house. So in example #4, we are assuming the owner of the property has planned to sell their house before the tax sale, they took the time to get it cleaned up and pretty to be sold, they have hired a Realtor who put it on the market for sale and had time to market it fully. Then they found a ready willing and able buyer, had the house pass inspections and appraisals and the buyer was able to get qualified for a loan. Going this route the home owner got full market value for their home, but this process took time, usually at minimum 2 to 3 months.
But what if you wake up one day and realize your home is going to be sold at the tax sale in less than 30 days, going the traditional Realtor route is not going to work and you need to sell in some counties before the sale. Here at kcmoHomeBuyers we have purchased houses in this situation. The homeowners wanted to sell and the sale was in a few short weeks, they needed a cash buyer who was not worried about how pretty or repairs, they needed a buyer who was not concerned about appraisals, they needed a buyer who had cash in 7 to 14 days, and they needed a title company who could move quickly on the transaction . . . then the transaction looked a bit different.
Sale Price $ 75,000 Closing Fees $ 2,000 Back Taxes $ 5,000 Mortgage $ 50,000
Seller Net $ 18,000
Why was the sales price so much lower?
Number One, they needed cash for the house and they needed it fast, that in and of itself can be the sole reason the price would be much lower.
Number Two, they did not clean up the house, make repairs and make it pretty for us to buy the home as they would have for the Realtor sale. We purchased the house cash, as is, with no repairs, no cleaning, no nothing, they just picked up and moved out and gave us the keys at closing.
So if you are facing a tax sale, do your research and see how it works in your county. Here in the Kansas City Metro area, most sales are coming up in the fall. And if selling is what you need to do, you still right now in June have some time to go the Realtor Route and one of our agents here would love to assist you.
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