Tax Liens and Deeds: Bidding Processes

Obtaining tax lien certificates or tax deeds at a public sale takes a different approach from bidding at auction. Your bid system will vary county to county as well as one state to another which is dependent on their particular guidelines concerning tax lien sales. A number of counties or state could have strict bidding processes while some other counties follow a freeform method.

Here are some processes in bidding for tax liens or deeds during public sales:

Bid Down the Interest.

This process can be used when purchasing tax lien certificates. Different from the more common auction, bidding down the interest approach makes it possible for bidders to decide on how low the interest rate they are willing to accept before buying the tax lien. Although, profit margins are based on the interest and this can be collected in the event the landowner repurchases the lien certificates during grace period. So, buyers need to make sure to not bid too low that will eliminate just about any real profit.

Bid Down the Title.

In the State of Iowa, investors can be offered the chance to bid the title down when purchasing tax certificates in public sale. This isn't really a favorable means of bidding for many buyers. While bid becomes lower, the buyer get less percent on the property or home and profits thence making it not suitable in all types of bidding processes.

Random Selection.

There are several counties that prefer the random selection method when selling tax liens because it is the cleanest process to offer investors the chance to avail for the properties on sale. With this, just about every bidder is given a particular number and a computer draws a number for every single property that is in the auction. The first bidder number that's been drawn has the opportunity to accept or decline the price of the required tax amount. If the bidder turns down, the next number will then be selected and so on.

Premium Bidding.

This process is much more related with the traditional auction. The tax lien certificates are sold to the one that bids the highest amount or the most premium over the lien amount. Some states as well as counties, nonetheless, do not permit interest to add up but only to the original lien amount.

Purchasing Over the Counter.

There are some states or county that would let you acquire tax liens over the counter directly from the treasurer or tax collector's office. This usually takes place with tax certificates that have been offered at the auction but receive no bidders. In Florida, it is known as €county held certificates.
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About the Author

Dan Gillespie is a real estate professional who invests nationally in everything from single family homes to land to commercial properties. An owner of Dan Real Estate Depot http://www.danrealestatedepot.com