The property has accumulated additional real estate tax debt and penalties. The question is, how can he sell the property back to the city? It would cost more to build the property up than it is worth.
A: We frequently get questions from our readers about buying cheap properties at tax sales to make a quick buck. Your question is exactly why we tend to respond to these questions with detail about the risks buyers take when they purchase properties at tax sales.
When properties are lost at a tax sale, many times the owners of those properties purposefully decide to stop paying the taxes and are ready and willing to lose the home rather than continue to pay both the expenses for the maintenance and upkeep of the property and the real estate tax bill. Our advice has always been to tread carefully when buying homes at a real estate tax sale or foreclosure sale, because you just don’t know what condition the property is in or what it will take to make it habitable.
Sam recently encountered a buyer who wanted to buy a property at a foreclosure sale. This buyer found out that the home had $20,000 in unpaid real estate taxes. The home had two mortgages with combined values of over $100,000, and the roof was about to collapse. Most buyers would have run in the other direction.
But, in this particular situation, the home was still a good deal because of the value of other homes in the area. Had the home been located elsewhere, no knowledgeable buyer would have touched it.
Your son now has sunk money into a property that still doesn’t have much value, if any, even after making some repairs to the home. You need to know that the city usually never buys back a home in your situation. The city is looking to get rid of those homes and have new buyers pay for the repairs.
We would advise you to have your son talk to a couple of real estate agents who work in the neighborhood where the home is located. Those agents may have other builders or developers that may want to take the home off your son’s hands. On the plus side, you may find that someone might make your son whole. On the negative side, you might not find anybody looking to take title to the home, and your son might lose the property to a tax sale in the same way that he purchased it.
You’ll know what is possible for the property only if you do some legwork and find real estate agents and home builders or other contractors who work in that neighborhood and have an idea of what can be done with the property. Then you might be able to save your son from losing more money. Good luck.