Tax Lien Investing Resource

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Tax Lien Auctions

If you decide to invest in tax lien auctions, make sure you're prepared and know what you're in for. Many of the inner workings of a tax lien sale are county specific, so make sure to ask your town representative to point you in the right direction of the rules and regulations of your county tax lien sales. I would still like to give you a rough idea of what you may be in store for attending a tax lien auction.

Tax Lien Auction Basics

Auction Dates

Most lien states will have annual sales, while most deed and hybrid states will have sales more often, sometimes as needed.

Auction Fees

Some counties charge fees for the right to bid at the auction. Some require deposits, and if you end up spending less than your deposit the county will refund you the rest, most likely by mail. This isn't the case everywhere though; in some counties you may be required to spend at least the amount of your deposit.

Auction Bidding

At each auction you are given a bidding card with a number on it that denotes your right to bid. There are ways to get multiple cards which would allow you more chances to bid and purchase tax liens, all perfectly legal. You may have to pay a separate fee for each separate card though. And then each card must have a different tax number associated with it. You can get around this by using your social security number for one card while using your tax identification number for another card. Or even using social security numbers of members of your family, all of whom will have to be present because most counties will only allow one card per person. So you will have to bring extra people with you, no matter what, to hold the extra cards.

Each county will use different bidding systems to handle bidding at their auctions. Be familiar with the different bidding methods and find out which one will be used at your auction.

Ways of making payments

Different counties will expect payments to be made in different ways. Some may accept checks, some may need a cashiers check or a money order. Some may even send you a bill later. Here's a brief rundown of some of the possible methods of payment at the tax lien auction.

  • Investor must have at least 10% of what they purchase on deposit. If the balance drops below the deposit amount, they will have to deposit more before they can continue bidding. Balance will most likely have to be paid in full at the end of the sale.
  • Requires no deposit, pay in certified funds directly after purchasing the lien.
  • No deposit required, payment is made at the end of the day for all liens purchased, in certified funds.
  • Deposit a set amount. And may mail invoice for the rest to the investor, requiring payment with certified funds within a specific period of time.

There will also be minor variations of the afore mentioned payment systems. The important thing is to make sure you come prepared with enough funds to purchase all the liens you want.

Online tax lien auctions

Many counties are turning over to online tax lien auctions. They are much faster and more efficient from the states point of view. And for the investor, it allows them to bid in multiple counties at once and saves traveling time and expenses, which are both normally some of the disadvantages associated with tax lien investing.

You will have to register with the county to be able to participate, most likely well in advance of the auction. Provide a SSN or a TIN, and fill out a W9. Make sure to contact the county and find out how it is run before attempting to bid at one.

Some closing remarks

Don't show up at an auction naked. Obtain a list of properties which will be available at the auction from the county and make sure to thoroughly and completely do your due diligence, which is just a fancy way of saying, do your homework.

If the property owner ends up not paying off his taxes, as the tax lien owner it is now your responsibility to foreclose on the lien. Be prepared for this eventuality. Though it most likely will not occur, if it does, with just a little work you will have acquired a property at a bare minimum initial investment, with which you can now do as you will.

For a great website that will help you locate government auctions and foreclosures in your area visit What kind of assets can i acquire through government auctions?

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