The Wonderful Benefits of Tax Lien Sales

Tax lien sales may be the thing for you if you’re looking for a nice way to make some interest on your hard earned money. What happens on a tax auction is that it sells the liens of a delinquent homeowner for unpaid property taxes. Once the lien is sold to the highest bidder, the proceeds would go the government. The government also has the right to foreclose a property if the debt isn’t paid within the redemption period.

As a matter of fact it is the property’s lien that is sold in the auctions. The investor who buys the lien can get his money reimbursed over time if the property owner pays off the debt plus interest. And if the owner fails to pay up, the investor can take ownership of the parcel by filing for a treasurer’s deed.

It is a win-win situation actually for the investor and the government. The investor doubles his money by getting it back plus the interest when buying tax lien certificate. Meanwhile, the government now has the funds needed to provide services to the people. Take note that the interest rates for tax lien sales can be on a minimum of ten percent and as high as fifty percent depending on the state rules. This makes investing in tax liens a good deal.

However, it is quite rare for a property to change hands because the homeowner would really straighten things out by paying up the back taxes. The redemption period after the time of the sale also gives the owner a chance to do his financial obligations. The sale is a sort of a loan for him. This shows that somehow everybody wins in a tax lien sale.