The Best Tax Lien Bidding Tips

By dhinternational  /  May 19, 2011 / Comments Off on The Best Tax Lien Bidding Tips

Ever wonder which are the best tax lien bidding tips? This article shows you exactly what you need to know and do during tax lien auction sales.

The Best Tax Lien Bidding Tips

The Best Tax Lien Bidding Tips

Bidding Down the Interest. This method is commonly used when buying tax lien certificates. With this method, different from the traditional process, it allows bidders to select how low the interest rate they’re willing to accept inĀ  purchasing the tax lien.

Profit margins are based on the interest which can be collected when the property owner buys the lien certificate again during grace period. Due to this, investors need to make sure not to bid too low that will eliminate any real profit.

Bidding Down the Ownership. Take Iowa for example, investors may be offered the chance to bid the ownership down when purchasing tax liens during auction. This is not actually the best method of bidding for many investors. As bidding gets lower, the investor will get less percentage of the profits and property which makes it the most unsuitable of all the bidding methods.

Through Random Selection. Some counties prefer random selection when selling tax liens as it is considered to be the cleanest method in offering investors the chance at the properties available for sale. In this method, every bidder is given a particular number and then a computer draws a number for every property that will be in auction. The first bidder number that has been drawn has the chance to accept or deny the price of the taxes due. If the bidder denies, the next number will then be chosen and so it continues.

Premium Bidding. Premium Bidding method is more related to the traditional auction. With this, the tax lien certificates are sold to the highest bid offering or the most premium over the lien amount. Some states or counties, however, don’t permit interest to accrue on “overage” but only to the original lien amount.

Through Purchasing Off The Shelf. There are certain areas where you can buy tax liens directly from the tax collector in a specific county. This happens often with tax liens that have already been auctioned but has not been bought yet. It is advisable to look into the property before buying.

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