Buying a Home from Ebay – A warning.

I wanted to post this up as a warning to others who may be thinking the same thing that I have in the past about the potential for tax lien homes via the source of Ebay.

As you may have read at my other posts – http://realestatecircleville.wordpress.com/2008/08/05/i-bought-a-tax-lien-home-this-week/ and http://realestatecircleville.wordpress.com/2008/08/14/i-visited-my-tax-lien-home-this-week/ I have been pursuing tax lien home purchases , through the medium of contacting holders on Ebay.

As of my last post about this opportunity I ran into quite the snag.

THANKFULLY I decided on having Real Living Title Co. perform a title search on this specific home in dayton which appeared to be a good buy.

Purchase price of home – $1,772

Back Taxes Owed – Aprox $1,300

Putting me ABOUT $3050 into the deal, now if you have seen the other posts, the home was a dog, but surprisingly was worth around $5000-$6000. My goal was to wholesale the property to a end use investor and put a quick $2000-$3000 in my pocket.

Well , unfortunately there was a large snag about 3 days before closing. The title company reported a senior IRS lien of $6,500 that would not be released until being paid off (The tax lien company never named the IRS in the foreclosure action) so this $5,000 property purchased for $3000 just went to being about $5,000 in the hole.

Thankfully I was able to dodge that bullet and got out of the contract, my $500 is gone as well as $275 for the title search which I am obligated to give the tax lien company.

Lessons learned -

1. INSPECT THE PROPERTY prior to purchase, as I tell my clients, sight unseen properties are usually loosers, this one could of been turned around for a small profit.

2. Get a good relationship with a local title company, in my area, I can get title searches run for almost free, in Dayton I will be spending $275 to have a search done on a property that I didn’t close on.

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