Baltimore Real Estate Investing Blog

86 responses so far ↓

• 1 Miriam (1 comments.) // Feb 20, 2009 at 8:53 am

  I recently came across your blog and have been reading along. I thought I would leave my

  first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I

  will keep visiting this blog very often.

  Miriam

  http://www.craigslistguide.info

  Miriam´s last blog post..How to generate revenue through Craigslist

• 2 Ned // Feb 21, 2009 at 1:48 am

  Miriam, Glad you like it, keep stopping back.

  Ned

• 3 Sire (53 comments.) // Mar 6, 2009 at 1:28 am

  Pardon me for asking, but what are ‘tax lien certificates’. This may appear to be a silly question, but as an Aussie I have never heard of the term before.

  Sire´s last blog post..Punishing Those Who Do Not Adhere To The Comment Policy

• 4 Ned // Mar 7, 2009 at 1:48 am

  Here in the states we have property taxes. If someone doesn’t pay the property taxes the government will put a lien, or security interest, against the property. The government can then foreclose and take the property for unpaid taxes.

  But the government doesn’t want the property they want the taxes, and they want it now. They need to pay teachers, policeman, fireman etc.

  To get the money they need now they sell the lien against the property, ( tax lien certificates) to investors. This entitles the investor to any interest due on the taxes as well as the right to foreclose and take the property for the unpaid taxes.

• 5 Sire (53 comments.) // Mar 7, 2009 at 2:18 am

  So, do I assume that they have to pay these on a yearly basis and is in on a persons home. Here we don’t pay land tax on your home but we do if its an investment property.

  Sire´s last blog post..WassupBlog’s February Stats

• 6 Ned // Mar 7, 2009 at 5:07 pm

  @ Sire,

  Yes we pay taxes on real estate whether it is personal or for investment. And also yes they are paid once a year.

• 7 Sire (53 comments.) // Mar 7, 2009 at 8:31 pm

  In that case I will stay in Australia. Then again, they may change the laws here and in that case I’m heading to Hawaii.

  Sire´s last blog post..Of Web Hosts And Blogger Friends.

• 8 mickey // Mar 19, 2009 at 11:04 am

  My mom told me about this sale and I was wondering once you pay the tax on the house is it yours, do you live in it,or due you just rent it out or make the owner pay you back the money.Sorry for so many ? at once just wanted to know before I do anything.

• 9 Ned // Mar 19, 2009 at 5:28 pm

  Hey Mikey,

  Welcome to my website.

  No, the house is not yours. The owner of the property has to pay you back the taxes with interest. If the owner does not do that within 6 months, then you can take the property through foreclosure.

  If you foreclose, that is a long process and the owner can pay you off at any time until it is completed. If the owner does not pay you off in time, the house becomes yours and you can do what you want with it.

• 10 Sarah // Mar 30, 2009 at 12:17 pm

  I was just told about this list yesterday by a neighbor. She was telling because the house I rent is on this list. Is there a place where I can see this list (I don’t have a subscription to The Sun)? And is there any way I can find information on what I’m supposed to do?

  Basically I don’t know if I should contact my landlord, and regardless, I’d like to know what will happen if the house does go up for auction and is bought by someone who does not plan to rent it out. Thanks!

• 11 Ned // Mar 30, 2009 at 1:21 pm

  Sarah,

  Go to BidBaltimore.com. I believe you can sign up and download the list for free. To actually register to bid is $100.

  Even if the property sells at the auction, your landlord will still own the property. However after 6 months the person who buys the lien on the property can start foreclosure. This process can take 6 months to a year.

• 12 SaraTG // Apr 12, 2009 at 3:32 pm

  Why does all this sound unconstitutional to me?…Seizing and selling someones $100,000+ home they`ve owned for 70 years because they owe $800 in taxes??? That seems a complete violation of the 8th Admendment which prohibits excesses fines or penalties.

• 13 Ned // Apr 15, 2009 at 1:57 pm

  SaraTG,

  Thanks for stopping by! You have an interesting point, on the surface that does sound like an excessive penalty. However the right for the Government to collect taxes has been well established in the courts. I would be interested to know if this specific issue has ever gone to the Supreme court.

  I would also point out that the owner has every opportunity to pay the taxes to redeem his or her Property. The process to foreclose takes 1-2 years. If an owner looses his or her property due to back taxes it is clearly because they did not make an effort.

• 14 SaraTG // Apr 15, 2009 at 10:24 pm

  Hmm..I agree that the Government has a right to collect taxes and historically the way it addresses non-payment is to attach wages for the amount owed plus a reasonable interest/penalty…At the time the Eighth Amendment was adopted, the Court noted, “the word ‘fine’ was understood to mean a payment to a sovereign as punishment for some offense.” Thus an excessive fine/penalty would be one out of proportion to the crime/charge..I think this tax/home auction thing bears a close relation to the laws some cities enacted by which they confiscated the vehicles of men who were arrested for picking up prostitutes..Those laws were later struck down as being unconstitutional in that they were excessive….Even if by some stretch a court should rule a city is allowed to do this I think it should only come after ALL normal means are exhausted to obtain the delinquent taxes..It most certainly shouldn`t be the first method used.

• 15 Ned // Apr 16, 2009 at 1:55 am

  SaraTG, thanks for the follow up.
  >I think it should only come after ALL normal means are exhausted to obtain the delinquent taxes.

  Properties do not go into the auction until they are behind approximately 9 months. The owner gets billed regularly in this period and notified that they are going into the sale.

  After the sale the tax certificate holder cannot even start foreclosure for at least 6 months. Then it takes 6 months to two years for the foreclosure to be completed. The property owner can easily stall or delay the procedure. The courts are usually on the side of helping the owner keep the home as long as the owner makes good faith effort at redeeming.

  The only people who lose their home through tax sale are people who don’t make a sincere effort to save it.

  By the way I have never foreclosed on an occupied property. The vast majority of homes that actually do get taken over are vacant and abandoned properties.

• 16 SaraTG // Apr 16, 2009 at 6:34 pm

  Thank you very much for all your information and follow up replies. It sounds as if there is a lot of time given and avenues a home owner can take to retain their home even after this “auction” has taken place and as you say I can see where only those who make little or no effort to stop the process would lose their homes. I was under the impression that this auction was to purchase the home itself. It seems from your replies that initially all one is doing is purchasing the “tax certificate.”

• 17 Ned // Apr 16, 2009 at 10:25 pm

  SaraTG, Thanks again for stopping back to reply. You must be one of my most loyal visitors

  >I was under the impression that this auction was to purchase the home itself. It seems from your replies that initially all one is doing is purchasing the “tax certificate.”

  Yes this is correct. Many people think that the house is lost at the sale but that is not the case. Also most people aren’t aware that the amount of the bid over the taxes and interest goes to the owner of the property if it is eventually taken over. While no one wants to lose their home at least they get something back for it. I guess I need to write a post from the property owners point of view.

• 18 jake // Apr 18, 2009 at 4:10 am

  so hows it possible to ever get the homes and flip em with in a couple months like these advertisments and commericals say…i know im supposed to know that theyre bs, but i figured they are just tryin to make a complicated loop hole look easy

• 19 Ned // Apr 19, 2009 at 1:15 am

  Jake,

  Some state offer tax deeds which is a quicker process. But you certainly are not going to buy a tax lien and be flipping the house in a couple of months in Maryland or most other places.

  Tax lien investing can be quite a profitable investment but it is not a fast process.

• 20 jake // Apr 19, 2009 at 2:17 am

  Thank you. Also, so that means you cant sell the property during the redemption period correct? And once you own the property, what happens to the remaining mortgage?

• 21 Ned // Apr 19, 2009 at 2:07 pm

  In Maryland you are only buying a lien against the property. You can’t sell the property until you own it (although you could sell your lien). In order to get the property you need to foreclose. This process can’t start for 6 months and can take 6 months to 2 years!

  However if you do foreclose any mortgage or other liens on the property are wiped out. You own the property free and clear. Good deal Huh?

• 22 jake // Apr 19, 2009 at 2:40 pm

  Ok gotcha. So you have to make payments on it until it is foreclosed? Thats no good cuz then that will exceed the purchase price and its interest if the owner redeems the property from you…

  Also, how can you learn to efficiently do title searches on ur own, so u dont have to pay to have it done? Its too expensive and chances are always less likely than likely of even getting a property, esp if u have limited funds.

• 23 Ned // Apr 19, 2009 at 2:54 pm

  No you don’t need to make any payments on it. While you can do your own title searches and foreclosure there is no reason to. If the owner redeems the property they must reimburse you for your legal fees. If you foreclose on the property they you are out the legal fees but that is just a cost of doing business. You need to figure in that cost when you bid for the lien.

• 24 jake // Apr 19, 2009 at 3:22 pm

  hey thanks again ….well i know i can go to the tax assessors office and search a couple things. But even when i Do search the title myself i cant find nearly enough. I can see how much the loan was for, but not the remaining mortgage (not that, that matters at a tax sale but for other type auctions maybe), additional liens and debts your inheriting, etc, etc…Even them at the office say ‘yeah if u want any useful info u need to pay someone to do it”. (Am I just not searching right?)

  But did you mean you wont incur any of those type debts other than the bid price, or you just simply wont need to pay on the Mortgage?

• 25 Ned // Apr 20, 2009 at 12:31 am

  Jake I have explained some of this in some of my other posts about tax sales.

  If you foreclose you need to pay the bid amount (amounts you already paid the day of the sale will be credited towards the amount due. ), legal fees, and subsequent taxes. Remember the taxes keep coming due every year and the owner isn’t paying them so you have to when you foreclose. No you do not pay the mortgage or any other debt on the property.

  If the owner redeems the property they pay you the original lien, interest, and your legal fees.

  As to doing your own title search that is a real skill. A complete title workup will include bankruptcy checks, lien sheet and a judgment report. None of these are found in the land records. While knowing your way around the land records office can be a useful tool don’t ever do you own title work for a settlement. You will not be able to get title insurance if you do you own title work.

• 26 Jake // Apr 20, 2009 at 2:28 pm

  Oh ok i see i see…whats the difference between a tax lien sale and a tax deed sale?…cuz i think some states are different if i wanna maybe leave state to go to one

• 27 Ned // Apr 20, 2009 at 10:11 pm

  With a Tax lien, you have to foreclose.

  In a tax deed state like Virginia the state does the foreclosure and you get a deed at the auction. However the owner usually has a redemption period. The advantage of a tax deed is if the owner doesn’t redeem then the property is yours without any additional work.

• 28 Jake // Apr 21, 2009 at 1:57 am

  Alright. Additional work such as foreclosing on the owner, or former owner?

  Again, thanks for everything. These are the last few minor details you have been helping me with, in which I have not been able to find to save me, and is what is holding me back from going to one. But not now. =)

• 29 Ned // Apr 21, 2009 at 2:10 pm

  Glad I could help Jake. I hope you keep coming back. I would sure appreciate if you mention my blog to others.

• 30 SaraTG // Apr 21, 2009 at 9:45 pm

  Ned wrote:”I guess I need to write a post from the property owners point of view.”

  Hello again I think this would be a good idea. I am sure there are a LOT of people who come on here who either themselves have their homes on the auction list or have friends and family members who’s homes are on there and they are worried and are hoping to find some helpful answers.

• 31 Donnell Curry // Apr 23, 2009 at 10:11 am

  How do you go about registering to bid on properties?

  Thanks

• 32 Ned // Apr 23, 2009 at 10:38 pm

  Go to bidBaltimore.com Full instructions are there.

• 33 Jake // Apr 26, 2009 at 9:47 pm

  Hey again…just wondering, are the rest of the debts wiped clear of the home shortly after the sale, or after the redemption?

• 34 Ned // Apr 28, 2009 at 3:30 pm

  Jake, welcome back. The debts against the property are wiped clean after the foreclosure is complete. In other words if you the tax lien holder take over the property, you get free and clear title.

  Until that time it still belongs to the original owner and all debts still apply. Anyone who has an interest in the property like a lender can pay off the taxes and you (the tax lien holder) get your money and interest back.

• 35 Tage // Apr 28, 2009 at 3:39 pm

  Scenario: A house is valued at $100k. Taxes owed are $2k. I bid $3k at the tax sale. I am the highest bidder and the state takes my $3k.
  Question: What return do I get (18% of what..$2k or $3k)? Thank in advance.

• 36 Jake // Apr 28, 2009 at 11:26 pm

  1. How helpful. Does the same rule apply to a tax deed? Which would be my case considering my state. And how does a foreclosure work at the end of a tax deed?

  2. What if I want to pay the owner to go ahead & sign the papers over to me bc they dont want it after the tax sale so I wouldn’t have to wait out the redemption. Or, even if someone else got it at the sale, then i get it from the owner, and pay off the bid price and interest to the purchaser. Would i then inherit the debts? How exactly would that scenario work?

  3. Also, how would it work if I got it before the tax sale, then paid off the taxes?

• 37 Ned // Apr 29, 2009 at 11:37 pm

  1) Well the rules in each state can be different. In general it you buy a tax deed you are getting free and clear title. There is no foreclosure with a tax deed. You have a deed and you are the new owner.

  Now in most tax deed states, the owner has the right of redemption for a period after the sale. But the advantage is after the redemption period is up. The property is yours, there is no additional step like a foreclosure needed.

  2) You can certainly buy the property right from the owner at any time. It’s his or her property after all, and has the right to sell it. The back taxes due are paid off at the time of the sale.

  Yes you inherit any debts attached to the property. The debts don’t go away for the old owner they go away for the tax deed holder. If you want to get rid of the debts on the property you need to buy it from the new owner after they have full title to the property.

  3) It is just a normal sale you are buying the property from the current owner. Just like in any sale the taxes have to be paid and up to date to transfer the property.

• 38 Ned // Apr 29, 2009 at 11:50 pm

  Tage,

  You will get interest only on the past due taxes, $2,000 in your example. However you do not pay the county the $3,000. you only pay them the $2,000 at the time of the sale. The other $1,000 is due if you foreclose and get the property.

  However that is actually a more complex question than it seems on the surface. Maryland uses a high bid premium. If you bid above 40% of the assessed value of the property you have to pay a “High bid premium” that you give to the county that does not accrue interest. This will in effect reduce the effective interest you earn.

  The high bid premium is a complicated formula and deserves a post of it’s own.

• 39 Lee // Apr 30, 2009 at 3:09 am

  I was just wondering what happens if a tax lien is purchased on a house and the owner sells the house before you are able to redeem the property? Does the new owner become responsible and the new owner’s mortgage cancel or am I out of the money I am paying?

• 40 Tage // Apr 30, 2009 at 2:54 pm

  Thanks Ned! Do you recommend anyone to handle the foreclosure? And what’s the approximate cost for the foreclosure proceedings? Thanks again Ned.

• 41 Ned // Apr 30, 2009 at 9:55 pm

  Lee,

  Thanks for visiting and commenting. If the owner sells the house, the tax lien holder is paid off. The sale of the property can not be recorded without the taxes being paid and up to date.

• 42 Jake // May 1, 2009 at 7:43 pm

  Ok great. So I guess if I’m gonna be sneaky & get a deal like what I was talking about, I could only hope to find a tax foreclosed home, with no mortgage or other debts on it huh? haha fat chance but i think i understand

• 43 Chico // May 2, 2009 at 8:10 pm

  What if the bank forecloses on the property before the 6 month waiting period is up? What if the property has liens from the IRS, could they take the property?

• 44 Ned // May 3, 2009 at 9:18 pm

  Jake,
  Hey it’s not as easy as the late night TV gurus say.

  Chico,
  Thanks for visiting. If the bank forecloses they pay you off. An IRS lien is a risk but my understanding is they will pay you off also. I have never run into an IRS lien.

• 45 Chico // May 4, 2009 at 10:41 pm

  Can you think of any example where you can lose money?

• 46 Ned // May 4, 2009 at 11:38 pm

  Chico,

  Welcome back. Yes it is easy to lose money if you bid too much. That is the number one risk. Next would be if you bid on a vacant house and there is a fire.

• 47 Jake // May 6, 2009 at 5:02 am

  Hey hey. Man when ever I think I’ve figured it out, something else important hits me. Most states have a premium bidding method. I just wanna clarify. Say a tax deed or w/e starts at 1,000 for the taxes, and the high bidder goes up to 1,500, would the 500 which exceeded the minimum bid of 1,000, be considered the ‘premium’, and tacked on to make it a final total of 2,000? Thanks again

• 48 Ned // May 6, 2009 at 11:16 pm

  Jake,

  It’s good thing I don’t give frequent flier miles for comments on my blog. . . you’d make me go broke In a tax deed state there generally shouldn’t be a “premium”. The amount you bid is the amount you pay for the property.

  You need to learn and understand the rules in whatever state you are bidding in. They will vary from state to state. I am familiar with Maryland laws.

• 49 Jake // May 7, 2009 at 9:02 pm

  Lol thank you im sorry…

  Well bc I looked up my state TN’s counties, and every one of them uses a ‘premium’ method. And I cant find any where that is specific enough about the premium and was wondering if I said correctly, how a premium bid works, in my previous message

• 50 Ned // May 7, 2009 at 9:42 pm

  Jake,

  It looks like Tennessee is a tax deed state. Here is my GUESS. When you bid at the auction you have to pay the full price of the property, but you only earn interest one the tax amount. The owner has a year to redeem. So the amount above the taxes is a “premium” which you do not earn interest on if they redeem as you stated.

  However the info in the link below for Nashville implies you earn 10% on the entire property bid price.

  Here is a link to Shelby county
  http://www.shelbycountytrustee.com/TaxSale.aspx

  Here is a link to Nashville
  http://www.nashville.gov/chancery/tax_sale.htm

  I suggest you talk to someone in the county property tax office or an attorney that handles foreclosures in your area. The people who do bank foreclosures are usually at least somewhat familiar with tax sale issues. Most attorneys will take an initial phone call for free if you are serious and have a quick question.

• 51 Jake // May 10, 2009 at 2:53 am

  Awesome. Thanks a lot. That makes sense. But yeah just in case, I will make a call. Bah! Why can’t loop holes be easy….

• 52 Emily // May 11, 2009 at 8:50 am

  What if the lien amount due is for an environmental clean-up of a property. Will a tax lien certificate still be sold? Does the owner have to pay the full lien amount to retain the house?

• 53 Ned // May 11, 2009 at 11:59 am

  Emily,
  Thank you for coming to my blog. Yes ANY municipal bill can put a property into tax sale. Yes you must pay the full amount to redeem the property. Environmental clean up has a serious sound to it. Perhaps this is a unique situation and can be negotiated with the city. If you are simply referring to trash clean up or lawn cutting absolutely those will go into the sale.

  Ned

• 54 Will Harris (5 comments.) // May 12, 2009 at 10:18 pm

  Ned you are a genius wrapped into a humanitarian’s body. Thank you for your blog. It is awesome.

  Many of my questions have been answered by reading your blog. I have read several books and visited a lot of websites and you have helped me more in the last hour of looking at your site than all my previous studies.

  Again, a lot of my questions have been answered on your site, but I have two questions to get your opinion on:

  1. Do you have any strategy suggestions when competing with the big boys who also are participating in the bidding game.

  2. Do you have any suggestions to make sure that I don’t overbid on properties?

  3. In Baltimore, there are Assignment Sales a few days after the first bidding ends. What knoweldge can you share on how it works and any strategy to employ. (I even considered purposely sitting out the bidding just so I could take a chance with getting a a tax lien certificate without the added competition.)

  I have been studying this for 2 years and I am finally getting my shot at this next Monday for the Baltimore bidding. Wish me luck!

  You rock! Your blog rocks! And, I will definately return back.

  Many Thanks!

  Will

• 55 Ned // May 14, 2009 at 11:16 pm

  Will,

  Thank you for such a nice compliment.

  Answers:
  1) I bid on a lot and hope that I get some that slip through the cracks the big boys leave.

  2) Due diligence. I physically inspect both the front and rear of every property I bid on. I also spend substantial time checking comps and values for the neighborhood. I will spend all my time for the next three days planning my bids. The biggest risk in tax sale is overbidding. You must also account for the cost of legal fees and subsequent taxes. I have seen a $3,000 lien cost me $16K total for a house after legal fees and expenses.

  3) There is no strategy for the assignment sale. You simply say which liens you want.

  Good luck,

  Ned

• 56 Will Harris (5 comments.) // May 16, 2009 at 1:32 pm

  Ned,

  Please disregard my previous question. I uncovered why I was listed as having $6K in pre. bid. I bid 50% on one home. I have since changed my bid and the issues is resolved.

  But, if I can ask you a legitiatmate question….what is the significance for the following notations in the bid process: HX = Homestead BK = Bankruptcy.

  I know what a bankruptcy means, but how does that apply to my bidding decision. And, I have no clue what a homestead signifies.

  Thanks!

  Will

• 57 Will Harris (5 comments.) // May 16, 2009 at 1:49 pm

  Ned,

  What is the difference in Baltimore between the “Full Cash Value” and the “Taxable Amount”. It looks like the term “Assessed Value” is also used in place of “Taxable Amount”. Here is one example below that I saw:

  Full Cash Value $718,640.00
  Taxable Amount $673,680.00

• 58 Ned // May 16, 2009 at 7:08 pm

  Will,

  I hope you and I aren’t bidding on the same things. It sounds like you might be bidding a lot more than me

  Homestead means that the tax increases are limited. If someone lives in their home, they are entitled to the homestead exemption and their tax increases are limited. The difference between the homestead exemption and the full cash value is the effect of the homestead exemption.

  The bottom line is it doesn’t affect how I bid.

  Good luck,

  Ned

• 59 Will Harris (5 comments.) // May 17, 2009 at 2:35 am

  Thanks again, Ned. Sound advice as always. And in terms of us competing for the same bids…I might be bidding on a lot more properties but my budget is a lot smaller.

  My accountant, aka my wife, has reduced my investment budget to $1,300; which pretty much equates to about two winning bids based on what I am bidding on. I am just bidding on a lot more based on your suggestions to increase the number of homes that I go after in the hopes that I get some despite the big boy investors being out there.

  I will be happy if I hit my budget limit in the first round and walk away with just one certificate (but, two would be nice).

  Take care,

  Will

• 60 Will Harris (4 comments.) // May 18, 2009 at 1:42 pm

  Ned!

  I won! I won! I won!

  Or at least I hope I won. Okay, today was my first time at the wheel with bidding on Tax Liens. I had a budget of $1,400. I will give you the play by play of what happened.

  First Round
  The first round I got my butt kicked. I didn’t win anything. I looked over the winning bids and began to see that I was out bidded on everything. So, I licked my wounds and went on to the next round with my head held high.

  Second Round
  Darn it! I got my butt kicked again. I looked over the winning bids and began to see that unless I divided into Prem Bids then the chances of me getting anything was slim to none! In addition, since I had a budget of only $1,400 if I went the Prem Bid route and really raised my bids….then I could only afford to get one. So, I jumped into Round 3 with a new attitude and a new & improved strategy.

  Round 3
  LET’S GET READY TO RUMBBBBBBBBLE! I won a bid. (The key word here is “a”).

  Here are the facts on what I won: Assessed Value = 34, 066, Owner Occupied, Lot Size = 1554 sq.f., lien = $533.89, winning bid = $17,950, Bid amount = $816.

  This gave me a total amount due of $1,349.89; which was just under my $1,400 budget. But, what makes this one soooo sweet is that I beat out two big boys…Two Thousand Nine, LLC & ETS Maryland LLC. (But, I call anyone who has more than $1,400 to spend big boys to me.)

  Now, with all my joy….I still don’t know what I got myself into. LOL I never went by to see the property. I only looked at the area through the Areal Map on Mapquest. I know what you are going to say, “Good luck”.

  But, I am encouraged for two reasons….#1 Multiple Big Boys bidded high on this and I beat them out. #2 Since I came into the game so late…I only bidded $1400 and I’m not afraid to lose that money if I made a bad investment (i mean guess).

  But, next time I will be smarter and spend more money.

  I hope you did well. I have more questions (like how do I manage this process now that I won a bid). But, I guess I will wait a little while since you are still knee deep in it.

  Thanks!

• 61 Ned // May 20, 2009 at 10:15 pm

  Congratulations Will!

  I think you did a good job. That is a great looking house a pretty decent looking block. I figure that is a $70,000 to $100,000 house so you have made a very safe bid.

• 62 jake // May 26, 2009 at 11:16 pm

  hey wat did u win at the tax sale ned?

• 63 Tasha (1 comments.) // Jun 23, 2009 at 10:25 am

  Hello Ned,

  I’m getting an early jump on research for bidding next year and your site has been very helpful. However, I still have a few lingering questions.

  First, I take it that the winning bid and the bid amount are not the same thing, but I don’t understand how that process works. Is it that if you decided to foreclose on a home you will have to pay the amount of the winning bid?

  Another question I have is how often would you say that you have had to foreclose on a property?

  Also, if you do go through the process and foreclose, how easy/ difficult is it to sell the property?

• 64 Emily // Jun 24, 2009 at 2:08 pm

  Hi Ned,
  If there is a sizeable mortgage (around $120K) on a property and the owner cannot afford to pay the lien (around $20K), the mortgage lender will most likely finance the lien amount. Is this still the case if the loan was aquired through the Maryland Housing Rehabilitation Program (MHRP)? Does the state put more risk on the table when the recipient of a low income assistance program isn’t paying taxes?

  Thanks,
  Emily

• 65 Will Harris (4 comments.) // Jul 28, 2009 at 8:16 am

  Hey Ned,

  I wanted to check in with you and see how you are doing?

  Also, I wanted to ask you about the next steps with my certificate. I haven’t done anything since I won my bid and I was wondering what I am suppose to do next? Do I need to send any type of letter or request notification to the city now? Or do I need to wait until the 4th Month.

  In case the person pays there taxes and my Pre Bid amount…does the city automatically deposit the money into my account?

  All my questions center around…”I have the Tax Lien, now what?”

  Thanks!
  (Editors note: two comments have been combined)

• 66 Ned // Sep 5, 2009 at 11:51 pm

  Will,

  You have a couple of options.
  1) you can file for foreclosure after 6 months but you must first send a letter to the owner 60 days in advance. We are just about at that time now, so if you want to start foreclosure as quickly as possible it is time to find an attorney. You want an attorney who specializes in tax sale foreclosure.
  2) Option two is to simply wait. The 60 day letter or the filing of the foreclosure will cause most owners to pay up. If the owner is going redeem anyway, why not wait and maximize the interest.

  The problem with option 2 is if they don’t pay and you ultimately foreclose you have simply delayed what could have been done much more quickly and that delay will cost you additional taxes when you take title.

  Good luck, – Ned

• 67 Ned // Sep 8, 2009 at 10:53 pm

  Emily,

  I don’t know. I would think any lender would step up to protect their interest. However it could get lost in the bureaucracy and slip through the cracks.

• 68 Ned // Sep 8, 2009 at 11:04 pm

  Tasha,

  This post may help answer some questions
  What is a tax sale?
  The amount you are bidding is the amount you pay IF you foreclose and acquire the property. The day of the auction you pay the lien amount and any high bid premium required.

  I start foreclosure on about 1/2 of the liens I acquire. I bid mainly on vacant properties so I expect to foreclose. The rest redeem before I have a chance to start foreclosure. Most will pay of once they get notice of the foreclosure. I get perhaps 3 out of ten that I start foreclosure on.

  Selling the properties is easy if the price is right so you need to be careful how much you bid.

  Good Luck,

  Ned

• 69 Ned // Sep 10, 2009 at 11:10 pm

  Jake,

  I won 38 liens, see this post.
  http://baltimorerealestateinvestingblog.com/2009/09/2009-baltimore-tax-sale-results/

• 70 craig // Nov 12, 2009 at 11:42 pm

  Hey Ned,
  I’am an investor and I’m trying to learn more about tax liens. Is there a way I could get one on one advise from you over the phone? This typing back and forth thing isn’t for me.
  Thanks,
  Craig

• 71 Ned // Nov 17, 2009 at 3:06 pm

  Craig I will reply privately – Ned

• 72 catrena // Feb 20, 2010 at 5:37 am

  I love your blog and read it often,I wanted to get one on one advice from you ,I think I’m ready to make my first purchase on tax certificate.

• 73 Ned // Feb 22, 2010 at 3:08 pm

  Welcome to my blog Catrena. I’ll be happy to answer your question but I have to know what it is! Leave a comment here or if you want it to be private send a comment via the contact us page. – Ned

• 74 nico // Feb 28, 2010 at 6:51 am

  don’t understand..round1, round 2 and round3..am I allowed to bid and then see other bids and then be allowed to change bids in future rounds..in other words..do u bid n bid n bid on 1 property until “the gavel falls”..thank u

• 75 Ned // Mar 2, 2010 at 3:05 pm

  Nico, I see you asked esentially the same question twice. I will answer your question on this post http://baltimorerealestateinvestingblog.com/2010/01/2010-baltimore-tax-sales/

• 76 jake // May 18, 2010 at 11:28 pm

  wuddup Ned?! how ya been? So i have a complex, farfetched, even silly, question. Could someone purposely lose their house to a tax deed sale, wait til that person claims their house after a redemption period, (and with the person being someone they know that bought the deed) then have that person sell the house back to them for far less than their mortgage was to begin with? So both sides win. Say theres 100k left on the mortgage, person buys tax deed at 5k, then sells house back to initial owner for 40k…then the tax deed buyer profits, while the owner now has a way less mortgage. Possible? Or fraudulent? Or what? Thanks

• 77 Ned // May 22, 2010 at 3:25 pm

  Jake,

  I don’t know the legalities of something like that, perhaps it could be considered a fraudulent conveyance. However I doubt that is the case, because the mortgage holder has the right to redeem to protect their interest. If the mortgage holder chooses not to redeem and protect their own interest I don’t see where they would have a right to complain.

  However you must understand a tax sale wipes out any claim a mortgage holder has against the property but it does not necessarily remove personal responsibility for the debt. When you get a “mortgage” there is normally two documents; a note which you are personally responsible for and a mortgage or deed of trust which makes the property collateral for the loan. Just because the collateral is gone doesn’t mean the money isn’t still owed.

  This actually came up recently. I got court decree giving me a tax sale property. I offered to sell it back to the previous owner saying that the mortgage was wiped out. The lender had loans on two other properties so he didn’t think it would be a good idea.

  So I am not sure it is practical, but I really do like your creative thinking. I wtote a post about something similar here Why would you foreclose on yourself?

• 78 jake // May 23, 2010 at 6:30 am

  Ohhhhh i see…so wait, i thought after the redemption period is up, that u own the property free and clear? That since prop taxes have first position over mortgages, the govt wipes away the mortgage. So if u do get a tax deed, get the prop after a year, then YOU are now responsible to continue carrying the mortgage debt?
  Thanks

• 79 Ned // May 23, 2010 at 5:03 pm

  Jake,

  No that is not quite right. The tax lien or deed holder Does not owe the mortgage – it has been wiped out via tax lien foreclosure or tax deed sale. The previous owner of the property still owes the bank. The bank could go after the previous owner if they chose.

  My point was that the tax sale releases the property as collateral from the mortgage loan. However the borrower (the previous property owner) theoretically still owes the money, just the collateral is gone.

  Please keep in mind that I am familiar with the laws in MD however if you are talking tax deeds you are talking about a different state that may handle things differently. What I say will apply generally and in most states but you need to be familiar with the rules in the particular jurisdiction that you are buying in.

• 80 jake // May 23, 2010 at 5:16 pm

  oh wow so you really have to have a heart of stone to go through with it then. Bc to do anything with the property youve got to kick the people out as well as leave them with a lot of money to pay back, & them not even have collateral to back it up?…geez

• 81 Jake // Aug 9, 2010 at 10:58 pm

  Hello again sir . I think I’m about to go to my first tax sale & i started thinking of it unfolding til the very end, & picturing what i would do with my self. Have you actually claimed properties from tax sales and had the occupants evicted? What methods and insight could you provide to where an investor could work it out so that i would still win nicely as an investor, and the owner wouldnt be screwed? Please and thanks!

• 82 Ned // Aug 10, 2010 at 1:42 am

  Welcome back Jake!

  Yes I have gotten properties via tax sale. no I have not ever evicted anyone because I have only gotten vacant houses. I did get a court judgment on a house that did have a tenant in it, but the owner wanted to keep the house so I negotiated with him. He paid me what I was due (Taxes, Interest and legal fees) plus another $2500. Not a bad return for a $400 lien. I could have taken the house and made an easy $10,000 but I was a nice guy and negotiated a deal with him.

  Other options,
  *Rent back to the original owner – probably not a good strategy in MD because of the homeowners in foreclosure protection act.
  *If the owner is older you could grant a life estate. That means they own it until they die and then you get it.
  *Or you could only buy liens on vacant properties or at least non owner occupied properties.

  I really don’t want to kick a little old lady (or anyone else) out of a home they own. I fell less concerned about taking a property from a landlord that didn’t bother to pay his or her taxes.

  PS: Jake can you vote for me as the best blog in Baltimore? Go to the home page here and scroll down a post or two to see how – I can rally use the vote thanks

• 83 Jake // Aug 11, 2010 at 6:12 am

  no prob! ur so helpful i wouldnt mind voting at all. Ok cool that stuff sounds good. What do you think of looking up the tax sales from a previous year that are about to reach the one yr mark. And say 20 sold, 15 were redeemed, and there are 5 left, then you call the owners letting them know they are about to lose their prop. Then the one or 2 that is just planning to let it go or cant come up with the funds to redeem it, you ask them to take it off their hands. You say if you will meet me up & sign the deed over to me ill give u $200 for ur time just to take it off ur hands. Then if they agree, u get the deed, at the last minute pay the taxes and whatnot to redeem the property, and then the property is yours. This way u didnt have to wait out the year, u just let due process narrow the props for u then u snatch ‘em up at the last minute. Sound good? Think it’d work? Thanks!

• 84 Ned // Aug 11, 2010 at 11:09 am

  Jake,

  Approaching people in tax sale is a good strategy. Your exact strategy has a couple of flaws.
  1) You are assuming that someone who is about to lose their house will give it to you cheaply – It does happen but it is not common.
  2) A more important issue is that their will likely be other mortgages or liens against the property. They simply can’t give you the property for $200.

  Yes you can do deals that way. I have. However just be aware that it is a numbers game. You may need to approach hundreds of people to find a deal that will work exactly that way. The way it will happen is to take action and start approaching those people. Good Luck – Ned

• 85 Jake // Aug 11, 2010 at 1:46 pm

  Gotcha. Yeah i figured i’d have to find one that is vacant and free and clear. Like perhaps an unwanted inheritance property or something. Which reminds me, u know anything about acquiring and or investing in probate estate? Ive heard its a great avenue for investment but am clueless on where to start

• 86 Jake // Jan 2, 2011 at 5:09 am

  Hey man hows it goin its been a while. So the local tax sale is coming up & for the first time i am serious about bidding. The closer it gets the more nervous i get. How often are there other liens on the property at these sales? Could i find out at the county courthouse or have to pay for a title search on every property of interest?

  Also, i was curious about Over the Counter Tax Liens…how do i find these?, Is it still sold by bidding or can u purchase it outright w/o competition?, & do the same rules apply for the over the counter purchases as the regular auction tax liens?

  Anyways thx as always & hope to hear from u soon,

  Jake

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