ax lien sales have many bidding at the top rate for that
different variations. The jurisdiction and then the rate is
statutes vary by state. In bid down until the lien is sold.
many areas, the rules will also In certain areas, investors can
vary at the county level. make up for a low rate by paying
subsequent taxes and through
One of the most important things minimum rate guarantee statutes.
that you need to remember when
buying tax lien certificates at a The advantage of the bid down
tax auction is understanding the method is you can easily bid on
method by which the county the exact lien that meets your
determines who is going to buy needs. You also don't have any
the tax lien certificate. In some possible co-ownership scenarios
areas, this is determined by the that can make it difficult to
investor bidding down the file foreclosure and take full
interest rate for the lien. In possession of the property.
many other areas the county will
sell the liens on a percentage of In other states, it is on a
ownership basis. In other percentage of ownership basis.
jurisdictions, the county uses a What this means is that the
round robin procedure to interest rate remains flat, but
determine the winner of the in the event of foreclosure, the
auction. In this article, I will investor and the property owner
explain the differences between become co-owners of the property.
the methods and the advantages The initial bid is with the
and disadvantages of each method. investor at 100% and it goes down
until the lien is sold.
The most common type of auction
is the bid down auction. The This method is great for high
auctioneer simply starts the interest rates. Iowa uses this
method, which means that you are more difficult to actually get
guaranteed a very nice 24% rate. the liens that meet your needs.
The problem with this is that if If you decline during your turn,
you end up as a co-owner with the then you have to wait for luck of
taxpayer, you may have an the draw to see if you get the
expensive legal hassle on your lien that you want. If you are a
hands to actually take possession big money investor, then it's not
of the property. that big of a deal because you
can buy a lot of different liens.
In other states, the bidding is But as a smaller investor who can
on a round robin basis. In these only afford a couple of the liens
areas, the auctioneer offers the on the book, this restriction can
lien around the room until be very limiting.
someone buys it. They are always
at the maximum rate allowed by As you can tell, the bidding
statute. procedure is something that is
very important in the tax lien
In round robin states, you get a research process. With proper
nice guaranteed rate of return on planning, you can wade through
your tax lien certificate, and the minefield and reap great
don't have to mess with the rewards!
co-ownership issue. However, in
round robin states, it is much
About the Author:
Carlos Scarpero is an experienced real estate investor who specializes in tax liens and deeds. Visit his tax lien and deed blog at http://www.scarpero.com/real_estate.
Read more articles by:
Carlos Scarpero
Article Source: www.iSnare.com 
