North Carolina is a tax deed state, meaning that when property taxes are become severely delinquent, the underlying property is offered at an auction. The proceeds from the auction allow the county to recover their uncollected property tax money.
Periodically, each county will examine its delinquent roll of taxes and produce a list of properties that will be offered at their next sale.
The sale is in auction format, and the minimum bid for the property begins at just the taxes owed, along with any penalties and interest that may have accrued. The property is sold to the highest bidder.
Many people are under the impression that North Carolina tax sale would be a good way to acquire cheap property. After all, the property is offered for just the amount owed in taxes, and the winning bidder receives the property free and clear of all mortgages and liens.
The first problem that will get in your way, is the fact that you will have to analyze the entire list of properties offered, and come up with a maximum price that you will be willing to pay at the sale. There can potentially be dozens or hundreds of properties on the list, and you will have to do your research without seeing the interior of any of the properties.
Keep in mind that many odd properties will make the list, and these often have no value. Many of the properties are likely to be slivers of land that are basically worthless.
Now, when the auction takes place, you will have to have all cash available to bid. Some of the properties that you wish to bid on will never be offered because the owner has paid the taxes since the list came out.
Of the ones that are left, which have real value, you will be competing against several other bidders, and the final prices of the properties may approach retail value because of the bidder competition.
With this information, I hope you have come to see that buying properties at North Carolina tax sale auction is time intensive, requires all cash, and rarely leads to a bargain purchase due to the “bid up” system that North Carolina uses. Just attend an auction and you will see for yourself.
However, this does not mean that North Carolina tax sale does not lead to the ability to make bargain purchases. It certainly does. You must think outside the box a bit.
What you will want to do is buy the properties that are about to be offered at the sale, directly from the owners. Get the sale list as soon as it comes out, obtain owner mailing addresses from the county if they are not already on the list, and send letters to the owners expressing interest in purchasing their property before it is lost to tax sale.
You will find many owners who have walked away from their property, or who cannot come up with the funds to redeem. And many of the properties will be free and clear – in most cases if the property had a mortgage the bank would have paid the taxes by now.
Many of these owners will be willing to part with their property for only a token payment – and some who really don’t want the property will practically give it to you.
In this way, you’ll avoid paying the high prices at the auction by cutting out bidder competition, and only research properties on which you have a potential deal.
Rick Dawson has earned the nickname “DeedGrabber” by purchasing dozens of properties out from under tax sale buyers.
Learn how to do the same with his 5-day email mini-course: “Go Ahead, Be a DeedGrabber”. Just visit DeedGrabber.com to get it now!
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