How to Find Tax Lien Sales
Tax lien sales are held by county governments. When a property owner becomes delinquent in paying property taxes, counties will issue tax liens against the property. In many cases, the county government will auction these liens to private investors. The purchase of the tax lien makes the investor the property owner's new creditor, and the property owner be be required to pay the tax lien investor the amount of the unpaid property tax plus a high interest rate within a statutory period in order to avoid foreclosure.
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Instructions
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Search the county government websites of the counties you are interested in. In many cases these websites will list tax lien sales along with information about interest rates, bidding rules and the properties that are the subject of tax liens.
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Check to see if the county property tax assessor, clerk of the county court or the county sheriff 's office maintains a website that is separate from the county government, because these authorities are often delegated the task of administering tax lien sales. If not, contact each of these authorities in person, by telephone or by email. If any of these authorities administrate tax lien sales in that county, ask them who the administrator is. Keep in mind that many county governments do not auction tax liens to private investors.
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Subscribe to an online tax lien sale database. Some of these sites offer limited information free of charge. This option is particularly useful if you are not sure which county's tax lien sale you wish to participate in, or if the counties you were originally interested in do not hold tax lien sales.
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Examine the bidding rules of the tax lien sales that you are interested in to narrow down your list of candidates. Some counties offer online sales, which is an advantage if the sale is being held far from your home. Others will allow you to bid by mail. Some counties use open bidding, while others use sealed bids. Finally, many counties will require you to post a deposit before they will allow you to participate.
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Narrow down your list of candidates to a short list based on the interest rate offered, because rates offered by different counties vary widely (they typically range from 12-24% per year). Some counties award tax liens to whichever investor offers to accept the lowest interest rate. This means that interest rates may be lower in large metropolitan areas that have healthy housing markets, because of the large number of investors competing for a relatively small number of tax liens.
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Tips & Warnings
Arrange financing for your bid in advance, because many counties will require you to pay the full amount of your bid within 24 hours of the sale.
The main attraction of tax liens for investors is the high interest rates they offer. Although a tax lien certificate holder may foreclose on the property if the tax lien is not paid within the state's statutory redemption period (between 1 and 3 years), the vast majority of property owners pay of the tax lien before the expiration of the statutory redemption period unless the value of the property is less than the value of the lien (a vacant lot, for example). For this reason, it is imprudent to invest in a tax lien for the main purpose of eventually obtaining title to the property.
