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 www.GovernmentAuctions.org.
What kind of assets can i acquire through government
auctions? |
