Preparation is the Key to Success in any Real Estate Auction or Tax Lien Auction
If you haven’t been to an auction before, you should absolutely attend one to get a feel for its action and pacing—a dry run before you actually start putting your own hard earned cash out. It doesn’t necessarily have to be a tax lien auction just a well-attended public auction.
Auctions are purposely designed to get the best price possible for the seller (not the buyer). Although tax certificate auctions are not quite as high-pressured as other types of auctions (REO, automobiles, etc) they still have many things going for them:
- A high, overall excitement level
- Your competitors sitting in the same room as you
- The marketing concept of ‘scarcity’ – limited time and availability of a product
I remember my first auction. It was years ago when I was attending a certificate exam. During the break, I happened to walk by a large real estate auction. I took a seat and immediately felt the adrenaline rush—ready to buy anything—the properties just looked so good and with everyone else bidding, it was hard to jump into the fray. Luckily, I didn’t have a certified check with me or I would be the proud owner of a couple REO properties.
Live, open-outcry tax lien auctions are normally very well attended. Those bidding fall into three categories:
- Large, corporate tax lien buyers looking to buy as much as they can
- Local, experienced investors looking for bargains not bought by the corporate buyers
- Newbies looking for one or two properties but largely shutout by the two characters above
If you fall into the last category as a newbie—don’t worry! Preparation for the auction goes a long way as long as you do your homework on what to expect. Here are the steps I recommend to make your auction a success:
- Get the latest copy of the entire list of delinquent tax lien properties.
- Bring the list with you and highlight the liens you are interested in and have done your tax lien due diligence on.
- Make sure the list is very legible and bring a couple pens to cross out liens that were removed just prior to the sale so you don’t lose your place when the auction starts.
- Read the rules of the auction carefully—know when you must register, what type of funds to they take, how the auction is handled, what order will the sale go?
- Attend the practice auction—most auctioneers will spend twenty minutes or so at the very beginning to show how he plans to go thru the properties.