What are the Best Tips for Attending Property Tax Auctions?

Jeremy Laukkonen
Jeremy Laukkonen
Businessman with a briefcase
Businessman with a briefcase

Property tax auctions can be an excellent place to obtain real estate, though there are a number of things to know before attending one. Each jurisdiction can have its own particular rules and regulations, so it is always a good idea to determine what the specific local practices are. Some states sell real estate directly through sheriff's auctions, while others sell tax liens that can be foreclosed on later if they are not paid. It is typically possible to obtain a list of properties and the taxes owed, which often represents the minimum bid that will be accepted. On the day of the auction it may be necessary to register, and either cash or proof of funds are often required in order to bid.

In most cases, the government entity responsible for property tax auctions is required to print a list of real estate and the tax owed on each ahead of time. This list can be examined to determine which properties may be of interest. It is important to keep in mind that these lists do not represent the real estate that will actually be up for auction, as many people manage to pay off their debts at the last moment. Many jurisdictions allow property owners to pay their back taxes up to 24 hours in advance of an auction, and some even allow payments the day of.

There are typically two different types of property tax auctions. The first allows investors to purchase the lien from the county, in which case the property owner then owes money to that individual rather than to the government. Property owners have a specific amount of time, often about three years, to pay back these liens with interest. If this does not occur, the lien holder can foreclose and either force a sale or take possession of the property.

Investors that are interested in taking immediate possession of real estate are typically more interested in the other type of property tax auctions. Rather than purchasing a lien from the government, these auctions result in the back taxes being paid directly from the proceeds of the auction. Buying real estate at this type of auction will typically result in a deed or title transfer to the winning bidder, though any occupants of the property may be given time to vacate the premises.

The most important tip regarding property tax auctions is to verify that nobody will be able to reclaim the property later on. In some areas, these auctions are the end of the process of attempting to satisfy tax liens. These jurisdictions do not allow the property owner to bid in the auction or reclaim the property later on, so anyone that purchases real estate in this manner is relatively safe. Other areas have more lenient redemption statutes, and if minors are involved they can sometimes reclaim the property years after it is bought at auction.

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