Is it still possible to sell your home if you are behind on your property taxes?
With financial distress increasing, more borrowers falling behind on their home loan payments, higher mortgage interest rates, and a very fragile real estate market, many more owners are going to be needing to sell their homes soon. Even just to avoid more damage to their credit, and the stress of the debt collectors.
Though what if you are late on your property taxes? Can you still sell your property? If you can, what do you need to know about it?
Trying To Sell Your Home In This Market
The real estate market has already substantially changed. Making it much harder, and less profitable to sell homes.
Goldman Sachs says it believes the deepest declines are behind us, and the market should bottom out by the summer or 2023. Of course, historic data suggests that the housing market is likely to drop far more, and for much longer. This is especially true in once hot boom and bust areas like NY.
Chances are high that your home is already worth significantly less than it used to be. While there are also very few home buyers with the courage to make offers. If they do, they are going to negotiate harder than ever, and will need better deals than ever before.
Especially with high inflation and high mortgage rates, you must offset this by having the lowest possible property taxes compared to competing home listings.
What Happens When You Fall Late On Your Property Taxes
When you are late paying your annual property taxes you begin to get hit with late fees and fines.
Your debt is auctioned off as a tax lien to investors. They bid on how much interest they are willing to take on this debt. Which can be as high as 18%. Which obviously makes it harder and more expensive to catch up.
If you still don’t catch up, then your property can be foreclosed on and sold off at auction. Often for just pennies on the dollar compared to what you thought your home was worth. That’s a nightmare scenario you do not want to end up in.
Taxes MUST Be Paid At Closing
There are many taxes involved in transferring real estate. Especially in NY. Along with other closing costs, and possibly real estate broker commissions. Meaning you end up pocketing a lot less than the top line sales price.
One of the main costs here that many forget about is any outstanding and prorated annual property taxes.
If a lien has been placed on your property, you are blocked from selling it, and cannot provide clear title to a new buyer, unless those taxes are paid up.
What If You Can’t Afford To Pay Your Property Taxes?
If you personally cannot afford to pay the taxes, and don’t have enough equity to cover them at closing, then there are a couple alternatives. They are not very common, but they are possible.
This includes having the buyer pay the property taxes. Or asking the real estate agents and mortgage brokers pitch in to help make the deal work.
The Other Solution
A far easier solution, and one which can actually help put more money in your pocket is to challenge and reduce your annual property taxes. This will make your property more appealing to buyers, and meaning you can actually afford to sell.