tax auction in Maryland

Tips for Preparing for a Property Tax Auction

Attending property tax auctions is a great way to build your real estate portfolio and find new investment properties. Properties sold this way are often considerably less expensive than they would be in a traditional real estate transaction. However, there are certain risks that come with buying properties at auction. Before you attend any property tax auction, use these tips to make sure you are prepared.

Whenever you buy or sell property, it’s crucial to make sure you meet all legal requirements. That’s why it’s important to have a trusted real estate attorney working with you on every purchase and sale. Set up a consultation with Evans Law by calling our team at 410-626-6009.

Clarify Times and Dates

Check the county website where you plan on attending a tax auction. Listings are also available at the Maryland Department of Assessments and Taxation website. Double check the times and dates and look for any requirements for entry. You’ll want to know who is permitted to bid on and purchase properties.

In general, anyone can buy at a property tax auction—however, some auctions require you to pay the purchase amount at the time of the auction, which is obviously important information. Not only can outside parties generally buy properties at these auctions, but so can those with a current lien on or claim to the property.

Research Properties That Interest You

You don’t want the actual auction to be the first time you learn about the properties being sold. There are so many risks involved with buying a property at a tax auction that you need to uncover any potential deal breakers before you even consider putting in a bid.

By looking at the list of properties being auctioned off on any given day, you can look up information on when a property was built and purchased, any easements that exist, how the property is zoned, and any other liens on the property. If you live locally, you can also drive by properties to get a feel for what neighborhood they are in and how much value they may have when fixed up.

You can also look at comparable homes that have recently sold in the area and use that to determine how much you might be willing to spend. While you won’t be able to get as much information as you would in a conventional real estate purchase, you should be able to learn enough to determine whether or not it’s worth bidding on.

Review Minimum Bids

The minimum bid at a property tax auction is equal to the amount needed to repay overdue property taxes, processing costs and fees, and the balance on any existing property tax postponement loan. Beyond that, requirements vary from county to county. There may be additional costs or fees that substantially drive up the minimum bid. Know the minimum bid for each property before you go into the auction and consider how much you are willing to pay for each property.

Don’t get caught up in the excitement and competition of an auction and end up overpaying for a property. If a property does not receive any bids, it may be resold at another auction with a lower minimum bid. Keep this in mind if there’s a property that interests you but just isn’t worth the current minimum bid.

Check Redeemed Properties Before the Auction

Legally, a property owner has the right of redemption. This allows an owner to get current on their past due taxes and avoid having their property sold at auction. In Maryland, a property owner can redeem their property by bringing their account current prior to auction. In some counties, even a partial payment will allow the property to be removed from the sale list, although this is not common.

After a lien is awarded at a property tax auction, the owner can still redeem the property until the property has been foreclosed upon. If they do so within the first four months after the tax sale, they do not have to pay bidder expenses. If they do so after the first four months, they must repay the certificate holder for expenses, attorney’s fees, and past due taxes.

This means that available inventory could change substantially between the time you first look and the auction itself. Before you go to the auction, check the property list to see if any properties have been redeemed. This ensures that you don’t waste your time waiting for a property that is no longer available.

Discuss Your Legal Needs with Evans Law

At Evans Law, we help property owners and sellers protect their legal rights. As you look into investment properties, take some time to find out how we can help you. Contact us online or give us a call at 410-626-6009 to schedule a consultation now.