How to Sell Land FAST after Winning at Tax Deed Sale!
Congratulations! You’ve just won a property at a tax deed auction, and now, you’re ready to turn it around for a quick profit. So, what do you do?
- Clear the title.
- Understand redemption periods.
- Survey the property.
- Check nearby land sales.
- Other profitable turnaround strategies
- Find your next deal!
Clearing Title
This is one of the first things you want to take care of to ensure your profit. The reason is that homes sold in tax deed auctions will have a cloud on their title.
There are a couple of ways you could clear the title. Whatever method you choose, you need to clear the title before moving on to the next step of your investment strategy. If you don’t, it will prevent you from selling the property in the future.
Depending on the state in which your property is located, you may not be able to resolve every title dispute through a quiet title lawsuit.
Quiet Title
The first option is the quiet title route. This term comes from the idea that the legal action will quiet all prior claims to the property, including any mortgage lenders.
This method entails a legal proceeding in which you can settle any title disputes. The process may also be called an action to quiet title or suit to quiet title.
The purpose of this lawsuit is to establish the ownership history of your property. This will help determine who the proper owner of the property is now, so you can legitimately stake your ownership claim.
To ensure the best outcome if you choose to quiet title is to use a reputable attorney within the county of the property you have purchased. Things may vary from state to state and county to county, so make sure you choose an expert who comes highly recommended.
The cost of this process can range from $1,500-$5,000. However, the cost could significantly increase if anyone contests the ownership in court, according to Rocket Mortgage.
Depending on the state in which your property is located, you may not be able to resolve every title dispute through a quiet title lawsuit. Read up on your local laws to see if this is the right method for your situation.
Title Certification
You may be able to order a title certification. This ensures validation of the tax deed sale in which you bought the property and the tax foreclosure process. If you choose this method, you may want to hire a reputable consultant to work on your behalf with a title insurance agent to clear the title of your new property. Cost may vary but will be within a similar range of a quiet title, averaging around $2,000.
Take note, this type of title clearing may make the property less attractive to buyers upon resale.
Quit Claim Deed
Another way to clear the property title is to acquire a quit claim deed. Check out this previous article where we explained what a quit claim deed is and how to use one.
To summarize, these deeds can be limited in usefulness. Typically, they are used between family members when no money is exchanged, a quit claim deed does not actually provide a warranty of tile or guarantee protection against any future claims. It only protects you from the claims by the person providing the title to you and may even be subject to invalidation due to misspellings.
Nonetheless, a quit claim deed can effectively convey a title just like the above-mentioned methods. Depending on your situation, this may be a good option for you.
Take note, this type of title clearing may make the property less attractive to buyers upon resale. Since it only protects against the person granting the quit claim and not any other potential claims, it can be risky, which could potentially lower the property value.
Redemption Period
Keep in mind that depending on which state your property is located in, you may be subject to a redemption period.
Redemption periods are set amounts of time in which the owner of a property sold at tax deed auction can repay the taxes they owe plus all the fees and penalties so that they are once again the rightful owner.
According to Rocket Mortgage, anyone with a legal interest in the property, such as a mortgage lender, can also pay the owed taxes and stop the sale.
The time period for this, if it is applicable, varies widely from state to state, so do your research.
Surveying Property
Properly surveying your property may be key to ensuring your maximum profit. You want to know exactly what you won at auction so that you can take advantage of all your options.
If you are experienced at land surveying, set aside time to walk the land, take pictures, and figure out everything that is included in your new property.
If you don’t have as much surveying experience, you can hire this out.
Surveying companies vary from state to state; however, some provide services across the United States. A few are Landpoint, U.S. Surveyor, and Millman. You may also want to check USA Land Surveyors United, which lists land surveying companies by state.
If you come up empty in your search for agents and buyers, you can list your property on a land-for-sale website.
Nearby Land Sales
One profitable strategy is to search for nearby land sales. There may be buyers or real estate agents in the area who specialize in acquiring the type of property you just bought.
You could approach them to sell for a quick profit without even putting in any sweat equity or improvements!
For Sale by Owner (FSBO)
If you come up empty in your search for agents and buyers, you can list your property on a land-for-sale website.
Here are some popular sites:
Even if you decide to sell the property yourself, you may still have to pay a commission to an agent that the buyer chooses to represent them. Also, keep in mind that without an agent marketing your property, it won’t get nearly as much exposure though it will be visible online.
On the plus side, you won’t have to pay an exorbitant seller fee to a listing agent. You will also have much more control over the whole sale process.
Depending on your investment strategy and goals, you may want to work with an agent to sell the property for a higher value or do renovations to maximize what the property is worth.
Potential Profit
Let’s run through an example together before you decide what to do with your new investment.
In this scenario, we’ll say you bought a property for $55,000 at a tax deed sale. Before you do anything, you want to clear the title. That’s another $2,500 out of pocket leaving you with a total of $57,000 invested. You decide to sell it as-is and list it yourself. The property is worth $240,000 at the time of the sale, so you turn it around and make a $182,500 profit!
Depending on your investment strategy and goals, you may want to work with an agent to sell the property for a higher value or do renovations to maximize what the property is worth.
For the fastest profit, though, you could sell it as-is, and it will still be worth far more than you paid at auction.
Some other strategies to consider are flipping, holding, or renting. Depending on the time of year, you might want to wait a few months for a higher market demand to boost the sale price.
Your Next Deal
Once you’ve chosen your strategy, you may be on the lookout for the next auction. If you want to stay informed on auction opportunities, you may want to leverage paid resources like PropertyOnion.com. For a small fee, you’ll be provided with data from a curated collection of public sources that cut down on the exhaustive legwork of finding properties.
