Bidding at Tax Lien and Tax Deed Auctions

If you’re familiar with the process of investing in government tax lien certificates, you understand what goes on at a typical tax auction. Depending on the county and guidelines for a specific auction, dozens (sometimes hundreds) of investors can show up and attempt to out-bid each other on one or more of the tax liens and tax deeds being auctioned for sale.

If you’ve ever been to an average auction in the real world, you’ve seen what goes on. The auctioneer will list a starting price and investors cast bids, incrementally increasing the price until everybody else drops out. The last person who bids ends up owning the item.

Not so with tax lien auctions. In these situations, the auctioneer, usually as county official, will announce the lien property and bidders will actually bid down the interest rate until nobody else is willing to accept the certificate at a lower rate of interest. In this case, the last bidder standing becomes the owner of the tax lien certificate for that particular property. Learn more in this short and entertaining video: http://www.tedthomas.com/truth-about-tax-lien-certificates/

In some cases, the bidding will continue until the interest rate reaches zero percent, in which case a tie-breaking method will be used at the county's discretion. Some can be quite entertaining.

When the interest rate on a property reaches zero, there is usually an ulterior motive on the part of the investor. He or she may have no intention of redeeming the tax lien certificate. Instead, the investor may be hoping to acquire the property itself via foreclosure at a later date. Perhaps the property is developed and contains a house on it. In the case of vacant land, it may be covered with valuable trees that can be sold as lumber. After foreclosure the sale of the property and any building on it can yield a nice profit, should it be in good condition.

Here are some testimonials about specific strategies applied by people who’ve taken my tax lien training course: http://www.tedthomas.com/testimonials/

In the case of tax deed sales, counties will often allow bidders to bid down the percentage of the property they are willing to accept at the sale. The winner of the auction who’s willing to accept the smallest portion of the property once the deed is sold will become what is known as "a tenant in common" with the property owner. While the winner of the auction is only entitled to the portion of the property he/she was willing to bid on, the rate of interest always remains the same.

Real Estate tax liens may be purchased at live auctions and online. Determine which is best for you and create a plan that will help you build wealth. This is the safest investment there is. Read my free book America’s Safest Cash Flow Generator and see why.