Trying to explain to a client why the tax sale isn't the bargain they think
A guy who's been a customer of mine for years came into my shop convinced he could buy houses at the tax sale for a few thousand dollars. He'd read that liens sell for the amount of back taxes owed. He's not wrong about that number, he's wrong about what he gets for it.
I've been trying to find the cleanest way to explain it and I keep going back and forth on which fact does the most work with somebody who has never looked at this.
One approach is redemption. Most liens get paid off, so what you're mostly buying is an interest payment from an owner who catches up. The house was never on offer. This lands well but people hear it as a technicality and go back to thinking about the exceptions.
The other approach is the cost of the exception. Even when a lien doesn't redeem, getting from certificate to a deed you can sell involves a waiting period, a foreclosure process with actual filing and mailing costs, and often an occupant. The $3,000 lien becomes a five figure project across a couple of years, and the procedures differ state to state so he'd need somebody local to walk him through his own state's version.
Which of those actually gets through to a beginner. I've used both and I can't tell which one sticks.
What explains tax sales best to a first-timer?
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