Points On Acquiring Tax Liens On line

Posted on January 25, 2013 @ 2:41 pm

Find out If Tax Lien Investing is Something you would enjoy

Even before you choose to become a tax lien investor, you should learn about the pros and cons

You need to know some of the common terms and procedures such as redemption period for the particular county, bid down the interest, bid on the premium, etc etc. When you get to the point where you have a good understanding of tax lien investing you should then determine if this suits your personality.

If you decide that this is something you want to get into, then proceed to Tip #2.

Search The Web For Good Tax Lien Websites

This is actually the easy part. Tax lien sales are processed at the courthouse so you should probably start by finding the website of tax collector for county you want to invest in.

Go to the google search engine and type in the state that you want to invest in, followed by “tax collector”. For example, if I wanted to invest in a county in Florida I would type in “Florida Tax Collector” in the Google search engine.

Using google will turn up a lot of results for tax lien investing and allow you to even sign up for a few auctions from the comfort of your couch.

Sign up With some Tax Lien Websites

Keep in mind that not all Tax Lien auctions are available online so your county of choice may not be available.

You should be prepared to provide personal information about yourself such as your social security number, name, address, etc. You might need to set up an account and or provide a deposit which will be required if you want to be a bidder. There could be a minimum requirement to register as a bidder. Don’t worry it is refundable.

Learn The Ways to bid on Tax Liens

There are quite a few ways to bid during tax lien sales auctions. In the cases where more than one investor wants to bid on the same property, one of the following five methods is used.

When multiple investors are involved, the winner is determined by one of the following methods. Bid Down the Interest.this is where several investors negotiate to see who will accept the lowest interest rate among all the bidders. In some cases the interest rate can go as low as 0%, but this is rare.

Premium.Under this method, the investor bid against each other to see who will pay the higher “premium” (above the face value of the lien). Note that the amount bid over the original value of the lien may not earn interest. Colorado is a state that uses the premium bid method.

Random Selection.bidders are selected at random with this type of method. Typically a computer is used to select bidders at random, but this can vary from county to county. Nevada uses the random selection method.

Rotational Selection. With this technique, the bidder with bid card 1 gets the first lien, bid card 2 gets the second lien and so on. If this bidder refuses the lien, bid ticket number two may then bid. However, bidder number one will not be offered another lien until their ticket number comes up again in the rotation. Once bidder 1 bids, bidder 2 gets to bid, then bidder 3, then 4 and so on…then back at 1 and repeat.

Bid Down the Ownership. This method is used in Iowa and a few other states, the investor willing to purchase the lien for the lowest percent of ownership on the property will be awarded the lien. For example, an investor may decide to take a lien on only 85% of the property. If the lien is not redeemed, the bid winner only receives 85% ownership of the property with the remaining 15% owned by the original owner. Not many investors will buy liens in states that use the ownership method.

So in the even there are multiple bidders on the same tax lien, the random selection method will be used. Liens that are not purchased at the auction are turned over to the county. Liens not sold at auction will then be available for “over the counter” purchasing.

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