Understanding the Tax Lien Auction Process

Understanding how a tax lien auction works can be a worthwhile process in the end as so much is involved in this lucrative venture.

A tax lien auction is nothing really different from the normal auction although each state and county has its own rules when it comes to dealing with, and conducting tax lien auctions but the normal structure remains. Tax lien auctions are normally conducted at the county courthouse and majority of them require immediate payment once the auction process is completed. As such, it’s crucial that you researched on what property you’ll be bidding on prior to the auction day. You would want to know that you’re making a sound investment so be sure to do a lot of legwork here.

The lowest bidder when it comes to the property’s interest rate emerges the winner. Here, tax lien auction becomes reversed from what one would expect from a standard auction. Nonetheless, in some states there is no bidding process and properties are simply listed in the counties. In such a case scenario, the first investor to show up and obverse the tax money to buy the property emerges the winner. Luckily, majority of states today conduct the actual bidding process and even allow the original property owners some time to raise the tax money.

Understand that in a tax lien auction for a tax deed, the property in question is sold to satisfy the current delinquent taxes. Tax lien certificate auctions on the other hand involve selling of tax certificates to get the whole sum of taxes owed and all the administrative charges alongside interest incurred on the amount owed. When buying a tax lien certificate in a tax lien auction, you’ll be paying against the needed property taxes on behalf of the delinquent taxpayer.

The Delinquent taxpayer is then expected to either pay you back the money you put on the lien plus interest or better still, incase they fail to repay, you get the chance to own the deed of the property. A court-appointed referee conducts the auction where they first announce the terms and conditions of the sale as well as the required deposit expected to be made at the auction. Normally, an investor would be expected to pay 10% in form of a certified check payable to the referee.

However, it’s critical that you find out how the state and county you’re dealing with conducts their Tax Lien Auction process, to be able to reap the full benefits over your competition.

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