I’ve been watching these infomercials about buying houses for just a couple hundred dollars. What’s the catch

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  1. Reply
    July 21, 2011 at 2:18 am

    finding the houses, making sure the are legit.

  2. Reply
    July 21, 2011 at 2:39 am

    You pay them money to find out how.

    Those are extreme examples. They are tax deed sales. It is an auction, when poepl don’t pay their property taxes. Yes it is possible to get a house for a couple of hundred dollars, but there are opther people bidding against you. It is really going to be closer to 80% or more of the value of the house. No warranty, no inspection.

  3. Reply
    Emily - GET BEX OUT!!!
    July 21, 2011 at 3:19 am

    The house is made out of cardboard boxes mwuahahah hah haaa

  4. Reply
    July 21, 2011 at 3:54 am

    The catch is that most are tax sales. Sure, you can buy them for a few hundred or thousand dollars, but you must pay the tax owed.

    I remember a few years back, a huge, local multi-million dollar sports complex was sold for just a few thousand dollars – problem is, they owed millions in back taxes.

  5. Reply
    July 21, 2011 at 3:55 am

    Chances are you have a better shot at winning the lottery than buying a property for the price of a tax lien. Nobody in their right mind is going to let a piece of real estate worth 10’s or even 100’s of thousands of dollars go for lack of a few hundred dollars for taxes. However, it has happened(think Murphy’s law–if it can happen it will happen) so their claims are not totally bogus just very, very, very unlikely to produce the results you want.
    The big fly in the ointment is that these liens run for a period of time(usually 3 years) and the deadbeat property owner can pay off the lien and get clear title restored anytime before the lien is perfected(foreclosed upon).
    By the way, Tim is incorrect about the auction process. The lien is usually auctioned off but nobody uses a percentage of the value of the property. Since an investor does not buy these with the goal of owing the property they set a price based on the yield of their investment in the lien. The expected payback of the lien is the lien amount plus penalties. Some investors are willing to pay a premium over the payback due the current interest rate environment. Hence, sometimes liens sell for more than their face value.

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