How to Buy Tax Liens by Mail
County governments place tax liens on real estate for which property tax is overdue. Some counties auction these tax lien certificates to private investors at high interest rates. This means that the investor becomes the homeowner's creditor and may foreclose on the property if the tax and interest are not paid within a certain period. More and more counties are allowing tax lien investors to bid by mail.
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Instructions
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Subscribe to an online tax lien sale directory such as the one at 4-tax-lien-certificates.com/all-tax-lien-states.html. This type of directory offers the broadest range of tax lien sale information, but with the least detail.
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Determine the areas that you are most interested in buying tax liens from. Use the directory to find tax lien sales in those areas, and find out which ones allow mail-in bids, if this information is available for the area you have chosen. Not all counties sell tax liens, and those that do may not allow mail-in bids.
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Research official county government websites in the areas you are interested in. The property tax section of the website should tell you which authorities administer any tax lien sales in that jurisdiction, and how to contact that authority. Typical authorities include county sheriff's offices, court clerks and property tax collectors.
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Contact the tax lien administrator in the areas you are interested in by telephone or email. Request a copy of the bidding rules for the tax lien sale, which should tell you if mail-in bids are allowed. You should also ask for the applicable interest rate. Some counties determine interest rates by competitive bidding, however.
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Research properties for which tax liens are being auctioned at tax lien sales that allow mail-in bids. Most counties will provide you with full information about their properties without requiring you to register for the tax lien sale first. Avoid properties with assessed market values that are lower than the amount of the tax lien plus any additional encumbrances. It is unlikely that the homeowner will pay the tax lien, and you could not make a profit by foreclosing on such a property.
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Determine the amount of your bid with great care and submit it by mail to the appropriate administrative authority. The minimum bid will probably be the amount of the outstanding tax debt. If someone else tops your bid, you probably will not get a second chance to purchase the tax lien. If your bid wins, a tax lien certificate should be mailed to you within a few days.
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Tips & Warnings
Check the length of the state's statutory redemption period (the period in which the homeowner has the right to redeem the property by paying off the tax lien), because this is how long you are likely to have to wait for full payment. Short periods (one year) offer quick payment, while longer periods (up to three years) offer high accumulated interest.
Some websites pitch tax lien investing as a way to eventually gain title to the properties that the liens are placed on. However, homeowners almost always pay off their tax liens before the foreclosure deadline.
