Assumption Explainations

1 ) Can a property be purchased for half its actual value?

The answer is yes. In fact, properties worth hundreds of thousands of dollars go to sheriff sale because a relatively small amount of taxes are due.  Keep in mind, a tax sale is different than a bank foreclosure.  At a bank foreclosure auction the Sheriff is usually required to have a minimum bid of two thirds the appraised value.  The bank typically will bid-up the price to cover its mortgage.  At a Tax Sale, the Sheriff sells the property for only the amount of the delinquent taxes.  

You may ask, why would a person lose their $300,000 house when only $50,000 in back taxes are owed. Why doesn’t the owner just refinance the property?  

In most of the cases the owner does just that. However, there are many situations where the owner is not qualified for a loan.  Sometimes the owner may qualify but runs out of time to secure the loan.  This scenario is quite common.  

Property owners fall behind on their taxes because they don’t have the money.   If they don’t pay their taxes, they are likely behind on other bills as well.  Paying taxes is easily put off for other more pressing bills; perhaps medical, car payment, utilities.   In many cases large companies buy the delinquent tax notes and therefore the county is paid.  So, putting off paying taxes is very easy.  If the property owner’s financial situation does not improve, eventually those back taxes catch up.  That is, the company who bought the tax note forecloses and in addition, the current back taxes become due as well.  Now the owner owes much more than originally thought.  

At this point the owner applies for a loan to pay off the taxes, only to find his credit score had deteriorated to the point that banks deny his request.   This leaves the owner with only alternative lenders who waste even more of the owner’s time to no avail.  Keep in mind, each time the owner goes through a loan application process with high hopes, the clock is ticking.   Unless you have experience it, you must understand that alternative lenders will initially cause the borrower to feel confident and ask for front money for application fee, appraisal fee and home inspection fee, only to eventually deny the loan.  After this happens a couple of times the owner has run out of time.  

There are lenders who may have completed the loan, however, finding the right lender in a short and stressful time period is like finding a needle in a haystack. Keep in mind at this point the owner is mentally depleted and may have already stuck their head in the sand.  

Once the property is sold at sheriff sale the owner believes it’s “Game Over”. Most property owners do not know they have property redemption rights after their property was sold at auction.  This is where Property Redemption Services, LLC enters the picture.

  2)   How will the property owner buy back the property in ninety days if he was not able to obtain a loan to pay off the taxes?

The former property owner will have the assistance of the Property Redemption Services staff to help find a suitable lender. PRS is vigilant of lenders who specialize in asset-based lending whereby the applicant’s credit history is not a disqualifying factor. An asset-based lender primarily looks at the equity in the property.  Likewise, PRS too, only buys properties with a substantial equity, around 35%.  This means, PRS will buy the property 35% below its market value. We do this to insure the property will sell fast if offered for sale.  This ratio is within the acceptable range of asset-based lenders.  The key is to introduce the borrower to a suitable lender.  PRS does not guarantee the property owner that we can successfully find or help find a suitable lender.  

3)  Will PRS be able to find enough properties to buy?

The short answer is yes.  The long answer is as follows: Its not easy to find the perfect deal.  Good deals are not necessarily found, they are created through negotiations, time, effort and persistence.  PRS staff know where to find prospective properties and knows what to expect and how to effectively negotiate.  If it were fast and easy everyone would be doing it.  PRS and its team has developed its process over time.   PRS is not just a one-trick pony.  In addition to tax sale properties, PRS is constantly seeking properties to repair, update and sell.  This process helps to ensure that our working capital is always working to generate large profits.  

4)  If property is behind on taxes, why wouldn’t the owner just walk away or file bankruptcy?

Bankruptcy itself doesn't eliminate liens attached to a filer's property, such as a home. Though bankruptcy is used to eliminate some types of liens through a separate court action, property tax liens survive bankruptcy and can't be eliminated. In other words, if your property taxes are eliminated in bankruptcy the property tax lien on your home will remain. Because bankruptcy can't eliminate property tax liens, you'll have difficulty selling your home unless you eventually settle those liens.  Further, if taxes are not paid the property will eventually go to tax sale.   This is the point where many PRS prospective clients are at.

5)   Is the Property Redemption Services the solution for all owners losing their property?

No.  Most of the time owners have very complicated circumstances; other bills, second or third mortgages, low equity, etc., too much to list.  This is where PRS experience comes in.  We know when the property is not a candidate for our services. Our experience enables us to steer clear of prospective properties which will not qualify.  We also recognize the properties that will potentially benefit from our services.  Our experience enables us to focus our time and effort to being productive.