Should I buy at or before tax sale auctions? Post 149

Coach Mitch’s REFLECTIONS™

Hi Coach,

Love your stuff but I must be dense. I understand the reasoning behind trying to get a house & land prior to the tax sale and that doesn’t seem to be a problem. What I don’t understand is if I should get a quick claim deed from the owner and then pay off the lien, how do I avoid the outstanding mortgage on the house? I’m now the owner so what happens to the outstanding loan mortgage?

If I actually go to the tax sale and win the property (even though I realize it would probably cost much more money with other bidders, at least I don’t have to worry about the outstanding mortgage.

Many thanks,

Keep up the coaching, coach.

Your student,

Joe

My answer:

You’re not dense at all. You do get it. You asked the good question and you already knew the answer. You do NOT avoid any outstanding liens that are attached to the property. If you own the property, then you are ultimately responsible for the property, the mortgage, the taxes, etc. Now what?

1 – One answer is to make an alternate arrangement with the owner. If the owner cannot sell the property and is going to take a loss of $1000 per month, perhaps you take on a portion of that while marketing the property. The owner might think it better to lose $500 per month rather than $1000 per month to maintain the property while you sell it. You would pay $500 per month versus $1000.

This is a classic Subject To scenario, whereby you take ownership Subject To the existing financing, and you make the payments while the owner moves on with his life or he waits to get a small payment when you sell.

2 – Another answer is not to deal with any properties that have mortgages against them. I have said in the blogs that about 40% of tax delinquent properties going to tax sale are free and clear. The main reason I like dealing with tax delinquent property is that such a high percentage of the properties are free and clear.

3 – Another answer is to utilize the special way that I deal with properties that have mortgages. I option them using Coach Mitch’s “famous $1 Option.”™.

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Call me. I would appreciate hearing what is going on in your area. I love talking real estate.

Git’er done,