The Tax Sale Process

By dhinternational  /  January 24, 2011 / Comments Off on The Tax Sale Process

Tax Liens Certificate Sale ProcessWhat happens in most tax deed sales? Usually, the auctioneer reads off the list of properties that are to be bid up the bidders. But for counties that hold online tax deed sales, the bidder must register online and then place a deposit first before he is allowed to bid. Properties are commonly listed by batches and there is a specific time to be given for each of these batches. You bid on the properties you are interested in and you’ll only know if you are the successful bidder after the sale.

Now tax lien sales differ for each states. States such as Arizona, Florida, and Illinois, have their interest rate bid down. In some, the tax lien is bid up while the interest rate is constant. A “premium” is the amount that is bid up from the due amount. It is also called an overbid. Some states such as Indiana and Alabama provide you interest on the premium that is paid for the tax liens while states like West Virginia does not. Now for Colorado and Vermont, you do not need to pay interest on the premium and you also get to keep the premium even if the tax lien will be redeemed. It is only in New Jersey where you can bid down the interest rate to zero. You will not get an interest on the premium, however, you will get the premium back if the tax lien will be redeemed within five years.

There are states that you are to bid down on the percent ownership interest of the property if the tax lien would be foreclosed. The bidder who accepts the lowest percent ownership interest on the property will be awarded the tax lien certificate. Nebraska, Iowa, Rhode Island, and Louisiana use this procedure.

In awarding tax lien certificates, there are states that follow either random selection or the round robin process. In random selection, the auctioneer selects the bidders in random as he reads out at the sale. With round robin process, the auctioneer will have to go around the room to offer the next property on the list to the next bidder. With these processes, it is hard to do due diligence on the properties and you can only either accept or decline the properties that are being offered to you.

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