The real estate market within a commuting distance of New York City is one of the most competitive markets in the country. People will pay multiple times what they would pay for similar properties in other states or regions.
It is also common for desirable homes in good neighborhoods to experience multiple purchase offers or even incite a bidding war. As someone who wants to make the transition from renter to homeowner, you may need to get a little creative with how you acquire property. Could a tax lien sale be the solution that you need?
How tax lien sales work
There are certain fees and municipal services that you have an obligation to pay as a homeowner. If you don’t pay your property taxes or you fall drastically behind on your water bill, those unpaid amounts may eventually become a tax lien against your property. Owners do receive a 90-day warning if their property is at risk.
Generally speaking, an owner has to have a minimum of $1,000 in property tax debt that has gone unpaid for at least three years for their single-family home to go up for tax sales. Debts on multi-family residential buildings that can result in tax sales include large balances of unpaid water services, as well as debts related to the Emergency Repair Program or Alternative Enforcement Program.
The state can’t compel an owner to pay these costs, but they may list the property for tax sale to motivate the owner. If that doesn’t do the trick, the state will then sell the debt to an investor. The owner has the right to redeem the property by repaying the amount owed plus up to 18% interest and certain fees. For many people who purchase tax liens, they can be a source of moderate and relatively passive income as opposed to a source of property ownership.
You may secure the property if the owner doesn’t settle the lien
Although many people redeem a property sold at a tax sale, some people are unable or unwilling to do so. That could mean that you become a homeowner for a fraction of the property’s value, although there can be other complications involved, such as securing possession of the property and dealing with other liens on the title.
Those interested in homeownership in New York, especially those considering unique ways to buy a home, may benefit from sound advice and guidance during the search for a property.