Premium Bidding on Tax Deed Auction and Tax Lien

By dhinternational  /  October 22, 2014 / Comments Off on Premium Bidding on Tax Deed Auction and Tax Lien

Premium Bidding on Tax Deed Auction and Tax LienIt is crucial for you to know the types of bidding methods commonly utilized at tax deed or tax lien auctions.  One of the popular methods is premium bidding.  We are going to talk about premium bidding first and how it is used for both tax deed and tax lien auctions.

About thirty states in the U.S. use the premium bidding method and the process for both tax deed auction and tax lien are quite similar.  Premium bidding is the amount over the minimum bid.  Bids begin at a minimum and auctioneer asks the people during the auction if there are any bidders for each property.  Bidders who are interested raise their bid cards and place their bids until there is only one bidder left.  Furthermore, you would only acquire interest on the minimum bid amount at a tax lien sale, and so any amount is not recovered by the investor.  It is because of this fact that you are willing to pay for the properties you’re interested in by knowing how much premium.

Premium bidding in a tax deed auction is just like in a tax lien sale, where the successful bidder is the investor willing to pay the highest premium on a tax sale property.  The increments in the bid amount would depend on the minimum bid set by the county and state.  Tax deed auction premium bidding method is also known as a competitive or open format.  Also, put into mind that you are bidding to acquire the deed to the property in a tax deed auction.  So, you would not think about the interest rate here unlike in a tax lien.  Premium bids can go as high as eighty percent of the assessed property value which is not common at tax deed auctions.

Remember that it is very important to stick to your plan.  Do not go over the limit and budget you have set for yourself, no matter how the bidding goes on each property.  And before you go to the sale, do some research ahead to get a good idea of the market and appraised values of the properties.  In this way you would get good deals on properties at high discounts on both tax deed and tax lien.

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