If this is the first time you’ve heard the term “deedgrabber” or “deed grabbing”, you’re not alone. However, you can bet dollars to donuts that within the next few years, it’ll become a household phrase– at least in the houses of real estate investors. It’s not a new method for obtaining property, but it has been a fairly closely guarded one until now. With the recent economic downturn, opportunities for “deed grabbing” have absolutely shot through the roof, and so deedgrabbers have been loosening their lips a bit about their formula for making a killing in the real estate industry.
And the funny thing? It’s SO SIMPLE, anyone who understands how could do it, and yet it never even occurs to most people who are trying to become tax sale investors.
So… what’s a “deedgrabber”?
To understand deedgrabbing, you first have to understand how and why people invest in tax sale property. Basically, here is how it works. Someone who owns a property neglects to pay their property taxes. This makes them “tax delinquent.” After a certain period of time, the government will take an action to recover the overdue taxes. In some states, the government will sell a lien at tax sale auction to the highest bidder. Then, a period of time will pass in which the owner can “redeem” the property- pay off the taxes- and if he/she doesn’t, then the buyer of the lien can apply for ownership of the property (in most states). If the owner does “redeem”, then the lien holder will get interest on the money he invested in the tax lien.
In other states, the government auctions off the actual deed to the property at tax sale. Thus, if you are the winning bidder, you usually get ownership to the property immediately.
Sounds great, right? Here’s the catch.
Since everyone and his brother is getting involved in the tax sale business, now the auctions are filled to the brim with people who are also trying to get those great properties for cheap. What ends up happening is that the lien or deed is bid up so high that it’s almost at retail value before the bidding stops. While this can be okay for tax lien bidders who just want to make some interest on their cash and hope that the owner will pay off, it can also be very bad for that same person if the owner DOESN’T pay off- then he’s got a property he paid close to retail value for that he owns, instead of making interest money off the investment and moving on to the next property. Not good.
And it’s especially bad for people who really want to acquire property to sell or rent. It’s almost impossible nowadays to get a good deal on a deed at tax sale- just too many bidders.
Savvy investors who encountered this problem came up with a solution- “deedgrabbing.” They directly contact the owners of the tax delinquent properties just as that period to redeem the lien is about to end- or in the case of tax deed states (most states either sell liens or deeds), just before the tax deed auction is about to take place. This little window of time is a gold mine- you’ll find highly motivated sellers, free and clear properties (mortgage companies pay off delinquent taxes on properties with mortgages long before the sale), and opportunities out the wazoo. (That’s an industy term.)
Want to learn the secrets of deedgrabbing? Go to deedgrabber.info.
Olliver Kennedy is a successful entrepreneur and real estate expert.
[tags]deedgrabber, deed grabber, deed grabbing, deedgrabbing, tax sale, tax lien, tax deed sale, tax lien[/tags]
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