Tax Auctions

[jpr9954]

I found a location about 90 minutes from home that could serve as both a BOL and a weekend retreat. It is a 1200 sq ft house on 6 acres with a small pond at the end of a gravel road.

The place was seized by the IRS because the owner used illegal (drug) money to buy it. The house is in TN and the former owner is/was in Texas so I'm not too worried about him trying to get back in. He only used it for a hunting location as it was.

It is listed on the tax rolls for $148K. The IRS tried to sell it through a broker for $90K but I guess there were no offers. Now they are selling it by on-line auction with a min. bid of $35K. It is sold as is.

I visited it today and it wasn't bad. However, the power is off so I don't know if the lights work or the well pump works. It will need kitchen appliances plus furniture to make it livable.

Does anyone have experience buying real estate through a tax sale like this? What are the advantages and what are the pitfalls?

Thanks

[goatlady]

Most potential pitfall is if a mortgage balance/Fed tax balance/local real estate taxes would still be due from the new owners/buyers. A tax sale is really a sale by a county for past due real estate taxes. A Fed. property confication/seizure sale is a bit different. Best check with a lawyer who is familiar with those rules and regs. Best also to have the place appraised (your dime) to verify the value is there and if need be could the property qualify for a loan to purchase or if there was/is any hazardous materials there? All the check necessary for a regular home purchase would be applicable.

[jpr9954]

Those are some very good points especially the appraisal and possible presence of hazardous materials (can you say meth lab!).

I think I mischaracterized this as a tax sale. It is more appropriately a Federal property seizure of assets. The owner of record is the United States of America and according to the flyer that goes with the sale the buyer gets a clear title with any liens and encumbrances to be paid by the government.

One thing that was suggested on another forum is to find out the previous owner through tax records or the register of deeds. Then I can search to see if he is still incarcerated or what his actual offense was.