In response to Tom's comments on the last post. O'kay let me give you quick lesson on real estate taxes. First of all, as you know you get a tax bill each year and if you do not pay it can get very large fast when it is hit at 16% interest. Second, eventually the City of Worcester will foreclose on the taxes due in order to get the property, but no conventionally like a mortgage. The City of Worcester needs to file all sorts of documents and go through the Land Court in Boston. So far so good.
What happens when the City is facing tough economic times and need the cash now? They sell the liens. Now lets suppose thers is a nice ranch in the West Side of Worcester, but for whatever reason has fallen behind and owe some $20,000 in taxes, water and sewer fees? An investor will pay $20,000 for the lien and take the place of the City of Worcester and go to Land Court to get the property.
The City of Worcester considers it a win since they are able to get the 20,000 now. The investor considers it a win since even if they debt is paid back it accumulates at 16-18% (not sure exact rat) and if it is not paid back, they get a great property for pennies on the dollar. Although it may be cherry picking, it is not something the City of Worcester is doing wrong. It really is the free market at work.
The biggest problem as I see it, however, is that these investors only accept full payment. If you owed the City of Worcester money, you can usually make partial payments to pay down the debt. These investors only accept full payment. The person, for whatever reason, got in the hole $20,000 now has to come up with $20,000 all at once to keep their house.
Same Time Next Year
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It’s been nearly a year since I wrote about the problems that come from
having 11 bosses who are not on the same page about anything, as well as
suggestion...
4 months ago
5 comments:
If a good real estate agent can help grease the wheels and get your offer in front of a lender, you can get an answer more quickly, and potentially close more deals.
Thank you for sharing the informative post.
When people are faced with the non payment of the property tax, sometime the Government offers the Government Tax Sales only at the Tax lien auction to the entire public. This is one of the steps where the income can be generated in the time of lost income. In the matter of the Tax Lien Sales, then it is genuinely just a certificate issued that is sold and purchased but it is not the authentic property or the land.
An interesting read concerning small business and Boston:
http://money.cnn.com/2009/06/12/smallbusiness/tour_wars_in_boston.fsb/index.htm?postversion=2009061505
Harry T
Worcester,MA
Wilson:
Good point. The tax lien sale is just a piece of paper, the lien on the property. You are not buying the property.
Bill
how long does the process take from worcester selling the tax lien for the investor to go through land court proceedings to end up with the property?
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