Tax foreclosure homes are becoming more and more common in today’s real estate market. Similar to a car at a police auction, these houses are usually grabbed up by people who are members of large networks or just smart individuals who know how to locate these deals.

The facts are that you do not need to be a member of one of these networks or subscription websites to locate tax foreclosure homes. Most often, the educated consumer can find one of these homes at an affordable price. While tax foreclosed homes may be a gem as far as opportunity and price range, they should not be considered as your only option in purchasing the home you would like.

Where does someone interested in purchasing one of these homes go to find them?

On the Internet, you can find these repossessed homes at an incredible price. Houses priced at $4,000-$36,000, can easily be found through the Department of Treasury Internal Revenue Service (IRS) real estate auction website. Simply visit the Treasury’swebsite and search for available properties that are being auctioned for delinquent IRS taxes.

You can also easily search state or county tax foreclosed homes for sale by going directly to the state’s or county official government website. Here are a few state examples below to show you how easy it can be done. I found homes for sale with a minimum bid as low as $4,905 in Durham County North Carolina. This was only after 10 minutes of research. Just imagine the tax deal you can find?

Here are some examples of real estate deals you can find in from Durham County:

  •  2804 Cannada Avenue $5,385  Awaiting Bid
  • 1007 Drew Street  $7,470  Awaiting Bid
  • 1300 Fleetwood Street $4,905  Awaiting Bid 

Initial bids can be submitted with a Bid Form and a 5% deposit of the bid amount.

Note: The Durham County Tax office regularly holds Tax Foreclosure Property Auctions. A listing of these parcels may be obtained from the Durham County Tax Department web site or viewed on the first floor of the Durham County Administrative Complex. Here is the web site link.

Beware of pay for subscription websites!

You’ll be amazed at the number of websites that charge a subscription for the same service that you can do for free. These subscription sites really just aggregate data from government website and then sell this information for a monthly fee or they sell your information as leads to other brokers who will then try and sell you other items you truly do not need.

Simply do a search on Google for the search phrase “tax foreclosure homes” and you will find some of these shady websites that claim ot be reputable subscription services. Avoid them at all costs and do business direct with the government.

Direct your questions regarding individual items for sale to the IRS Representative in charge of the sale. Please mention that you saw the advertisement on the Web.

Here are some FAQ’s from the IRS on buying tax foreclosure homes:

REAL ESTATE

Do I get clear and insurable title?

All property is offered “As is” and “Where is” with no guarantee or warranty, expressed or implied. We provide information about known encumbrances against or other interest in the property offered on Form 2434-B. We do not warrant the correctness or completeness of this information and it is provided solely to help prospective bidders determine the value of the interest being sold. Prospective purchasers should exercise due diligence when bidding on property. All realty that is sold by the Internal Revenue Service is conveyed by Quit-Claim Deed.  Contact the PALS to determine if a third party title search was secured to review.

If I am the successful bidder is the property then owned by me to do as I wish with?

According to the Internal Revenue Code, Section 6337 the following individuals have the right to redeem the property at any time within 180 days after the date the successful bid is accepted by the IRS:

  • The owners, the heirs, executors, or administrators of the owners.
  • Any person having any interest in the property.
  • Any person having a lien interest in the property.
  • Any person on behalf of those listed above.
  • During the 180 day redemption period may I collect rent, evict tenants or move onto the property?

The taxpayer and others of interest have a right to redeem the property and any action is dependent upon state law. Therefore, you should contact an attorney or legal representative for this type of advice.

Will I be paid for any expenses on the property that I expend during the 180 day redemption period if the property is redeemed?

The law requires only that for cash sale, the property or tract of property may be redeemed upon payment to the purchaser of the amount paid by the purchaser plus interest at the rate of 20 percent annually.

What happens after the 180 day redemption period? What kind of deed and when will I receive it?

The Internal Revenue Code Section 6338(b) provides that whenever real property is not redeemed within the 180 day period, the purchaser, or his/her assign, will be issued a deed (usually a Quit-Claim Deed) upon surrender of the Certificate of Sale. The deed will be in accordance with the laws of the state in which the real property is situated pertaining to sales of real property under execution.

Can I negotiate to buy seized property from the Internal Revenue Service before the auction?

No.  The Internal Revenue Code section 6335 requires that the sale be conducted either by public auction or by public sale under sealed bids.  The law does not allow the Internal Revenue Service to bypass the auction or sealed bid processes.

Since the Internal Revenue Service can only accept cash or certified funds at their auctions, how can I bring certified funds if I don’t know how much the property will sell for, or if I will be the successful bidder?
 
At single item sales, many bidders will bring a cashier’s check, made out to themselves, in the amount of their intended bid. In addition bidders will also bring cash to make up any difference between the amount of the cashier’s check and the winning bid. At large lot sales, bidders often bring several cashier’s checks made out to themselves to cover multiple possibilities. For example,  a bidder may bring one cashier’s check for $5,000, two checks for $2,500, and one check for $1,000. Any checks not used can be redeemed at your bank by you. And we usually have the ability to make change to some degree. Of course, other amounts and scenarios may apply.
 
What other fees do I have to pay the Internal Revenue Service at the auction in addition to my successful bid?
 
Unlike many other auctions, the IRS does not charge or add on any buyer’s premium at our sales

Moe Bedard
My name is Maurice "Moe" Bedard. I am the founder of America's #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.