ONLINE REAL ESTATE AUCTIONS
How Do Online Real Estate Auctions Work? Watch and learn as Ted Thomas, America’s leading authority on tax lien certificates and tax defaulted property investing, shows you how to buy bargain real estate from your home no matter where you are in the world.
Watch the video above or read the summary below:
Today I’m going to answer your question, how do online real estate auctions work?
My name is Ted Thomas, and I’ve been involved in the tax lien and tax deed business for about 30 years. I started as an investor, and I got into this business because I found it was safe and secure.
It had a lot less ups and downs than the regular real estate. As you know, the stock market goes up and down. The metals market goes up and down.
I like to have a nice, safe, secure market that’s pretty steady, and you’ll find that with tax defaulted property and tax lien certificates.
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OFFLINE AND ONLINE REAL ESTATE AUCTIONS
In the past decades, things have really changed a lot. It used to be, we had to drive to every single auction. We had to go to the county and get a list. Now we’re pretty much transitioned over to doing everything online.
The counties still do both. So you want to learn both ways to do it. But the online bidding has now allowed us to sit in Miami, Florida and buy in Seattle; sit in Boston and buy in Los Angeles. You’re getting the idea.
Anywhere in the country is going to be open because they have online real estate auctions and offline, and they have a hybrid of those.
Sometimes you’re bidding online, and you’ll actually see an auction going on in the room, the same auction. The auctioneers have now trained themselves to be able to do both of those.
There are going to be over 5,000 auctions this year, and many of those will be online real estate auctions. So you need to learn that process as well as to doing it offline. There are a ton of auctions and a lot of ways to do this.
SUBSCRIBING TO ONLINE REAL ESTATE AUCTIONS
What we’re talking about is online real estate auctions. Now, auctions online, I have to tell you, they’re pretty darn boring. They’re not hard.
What you want to do if you’re going to be an online buyer is start subscribing to the different services that actually promote those.
Those are going to be independent companies, but you can get who they are by just going to the website for the county where you want to purchase. They’ll tell you what auction company they’re using.
They’re using companies outside of the actual county themselves. So what they will do is they will conduct online real estate auctions, which you can watch and you don’t have to spend any money. You can just watch what’s going on.
If you want to get into the actual bidding, I’d tell you to watch a couple so you know what’s going on.
How many auctions are there going to be this year? Well, I can tell you there are going to be 5,000 auctions.
I couldn’t even tell you how many properties. It’s going to be thousands of properties. I should say thousands and thousands. Many of these properties are going to be sold with 60%, 70%, and 80% discounts and no mortgage.
REGISTERING FOR ONLINE REAL ESTATE AUCTIONS
How do online real estate auctions work? First of all, find out the location of the auction. Find the county where you want to buy, and then find out what they’re going to do.
This is going to be a safe and secure auction. So you’re going to start with a registration process. It’s just an online document to fill out. That’s going to be the registration.
During the registration process, they’re going to ask you how much money you want to invest. Then they probably will start asking you for banking information.
Expect that they’re going to ask you about how much money you’re going to invest and where it’s going to come from because you won’t be able to bid at the auction unless they know where the money’s going to come from.
STARTING BIDS AT ONLINE REAL ESTATE AUCTIONS
How does the auction start? It starts with low bids. For the first bid, the county will probably say, “This is the minimum,” and then everything will go up from there. Those auctions can really go up fast, or they can go up very slowly.
When they go up slowly, it could be because the county has specifically said that people can bid at $100 at a time.
You’ll get a group every once a while that will start $100 above the bid. To get to $100,000 is going to take a long time, and believe me, there are going to be some nice properties at these online real estate auctions.
So you could tune in at nine o’clock in the morning, and you might still be there at 10 o’clock at night. I’m not trying to scare you away, I’m just trying to tell you at $100 at a time, it’s going to take a long time to get there.
That’s something that happens at online real estate auctions.
When you go to a live auction, the auctioneer’s going to say, “Stop, I’ll take $1,000 or $5,000 bids.” They’ll just stop that because they’re not going to wait all day. They’re going to make it happen.
For the online real estate auctions, it’s basically a computer doing it, so it’s a lot different. The bidding could increase only at $100 at a time, or you can do a lot more than that.
BIDDING AT ONLINE REAL ESTATE AUCTIONS
When you want to get a property, you want to know what your maximum bid is. You want to have a plan to do that.
At online real estate auctions, you’ll find two types of people. The people bidding $100 at a time. They’re pretty timid. They’re going to go slow. Then there are the other people that are really aggressive.
If you see aggressive people, just back away for a little bit and watch what they do. If they’re too timid, also back away and watch what they do. You’ve just got to learn.
Some of the auctions will be a perfect for you, and they’ll be at the pace you want and the comfort you want. But some auctions will be at $100, and then you’ll have to wait five minutes for the next bid to come in.
Then the big clock will run out, and they’ll have to bid. But if they only bid $100, it can be agony waiting to get there.
ONLINE REAL ESTATE AUCTIONS RUN BY AUCTIONEERS VS COUNTIES
When do these auctions take place? Generally, during the week. They usually start at business times in the morning, but they can run well into the night if people are timid bidders.
I don’t know what you’re going to run into. Nobody else does either. You’ll just have to go and watch them. Watch the particular auctions.
Every county can commission an outside company to do it, or as all counties have done for 200 years, they can auction it themselves. This is a formal process.
If the county does it themselves, you’ll probably like it better, even though the people are not professional auctioneers, because they’ll get the property sold and get it done relatively quickly.
Auctioneers take their time because they make commissions on the total price. There’s always some angle like that going on in every business. But if it’s a county auction, they’ll make it happen very, very quickly.
PRACTICING FOR ONLINE REAL ESTATE AUCTIONS
Before you ever get involved in an auction, practice a few times. I’m going to give you a whole list of things before I finish here, but practice by watching.
If it’s going fast, just sit back and relax. Don’t get involved. You don’t need to hurry into this process. If you do, you could make a mistake, and I don’t want you to do that.
When you give the county your bank account and you make a bid, take my word for it, they’re going to take that money. I doubt very much if you’re ever going to get any of it back unless there’s some unusual circumstance.
I’ve never seen the county give money back. They take the money, and they keep it. They tell you right in the registration point that if you’re investing, you need to know what you’re worth.
So buyer beware. Go slow.
Tax deed buyers are aggressive because they’re trying to get property and make big profits. So the first part of the auction you’re going to see they’re very aggressive. Don’t be aggressive. Just take your time.
THERE ARE PLENTY OF ONLINE REAL ESTATE AUCTIONS
The beauty of this business, the brilliance of this whole thing is there’s going to be another auction. There will be at least 5,000 this year. They’ve been doing this for 200 years.
There are 3,000 counties in the United States. About 1,500 of those will have auctions every single year, and all of them are allowed to have auctions every year.
I can’t give you a video of this, and I’ve been a big video fan. I can’t give you video of any of the auctions because if we go in there with cameras, they’ll just shut us down until the police remove us.
We’re not going in there with cameras anymore. They don’t allow it. They don’t want people to know the process because people try to game the auction, which means there are people that aren’t too honest.
So online real estate auctions are pretty boring. The live auctions are a lot of fun. I prefer the live auctions because the county employees might not be great auctioneers, but they get the job done.
I’m only there to produce a result, and that’s to buy the property as low as possible.
There will be tax lien auctions online, and there will be tax deed auctions online. Some counties will have a mixture of those two. I would not bid until I attended two or three of those online real estate auctions.
KNOW YOUR EXIT STRATEGY
Before you make a bid, you need to ask yourself:
- What is your exit strategy?
- What are you going to do with that property?
- Do you know how you’re going to sell it?
If you don’t know how you’re going to sell it, you’d better figure that out before you start bidding.
90% of the people bidding have no idea.
I’ll say, “What are you going to do with this property?” and they’re going to say, “Sell it.”
Sell it is not the answer. That sounds good, but it’s not going to pass muster with me. Why? Because it’s a process.
If you don’t know that process, you’d better get a coach. You’d better get someone that’s going to teach you that process. Because you could end up with a lot of money invested and not be able to move it.
It might be in the wrong place. There are a whole bunch of mistakes you can make.
- What are you going to do about the title?
- Is the title clear?
- Are there problems with the title?
- Have you investigated the chain of title?
If you don’t know what the chain of title is, now’s the time to start figuring it out. Don’t wait until later.
- Who is responsible for this property while all this is going to take place?
- If you’ve got someone that’s going to take care of it, what’s the value?
- How do you know the value? Is it the county’s assessed value? Is it someone else’s value?
Darn sure isn’t Ted Thomas’ value. So you need to know. How did you determine that, and why did you determine it? What’s happening to all the encumbrances?
Well, Ted, you said the mortgage wasn’t there. Well, it’s true, the mortgage is wiped out.
- Have you thought about the other liens?
- Could there be an IRS lien? Could there be a federal tax lien?
- Could there be other liens from the counties and the cities?
The time to learn that is ahead of time, not when you get the property.
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THE PROPERTIES AT ONLINE REAL ESTATE AUCTIONS
What condition is the property in? If you looked at a nice picture online, is the picture four years old or six years old? Is it before the hurricane or after the hurricane?
You have a lot of questions that you need the answers to if you’re going to be a buyer at online real estate auctions.
It’s not like a TV show that’s 30 minutes long where there’s an average to mediocre house. All of a sudden this pretty girl is talking to all these contractors, moving in and out. They’re putting in new kitchens and new bathrooms and tearing walls down and making this place look like a mansion.
This isn’t that business. We’re buying used and abused properties. We’re trying to get Cs and Ds. We don’t very often get an “A” property.
Once in a while my clients will get one, but I don’t get any “A” properties. Why? Because for those country club properties, everybody bids the heck out of them.
I’m a bargain hunter. I want to get the properties with 70% and 80% discounts. 20 cents or 30 cents on a dollar is enough.
BEING SUCCESSFUL AT ONLINE REAL ESTATE AUCTIONS
Now, who’s going to be successful? I’ll tell you right now. It’s always the same people.
Who are they? They’re people that don’t cut corners, the people that get training. They’re the people that have coaches and mentors and guides.
If you want to be successful, you want to be in the 20% that are successful. The 80/20 rule applies here. 20% of the people will follow instruction.
80% of people are not successful for a reason. They’re gunslingers, and they get themselves into trouble.
EXAMPLES OF REAL ESTATE AUCTIONS
Right now I’m holding the Miami Herald. If you wanted to buy at a tax lien sale, a physical one, the Miami Herald is telling us that this year they had 65,000 tax lien certificates to sell.
There are no pictures. It’s page, after page, after page of tax liens. In Florida, they’ll have over 1 million certificates this year.
Here’s another auction, and then I’ll show you some others online. This is Duval County, which happens to be Jacksonville. They have 30,000 certificates here, and again no pictures. So those are tax liens.
Now I’m holding a brochure from a county that I bought from in New York. I took this from the auctioneer’s website, and I printed it out. None of the properties really look great, but they have pictures of them.
For this auction, I was online in Florida buying from my desk, and they were conducting the online real estate auction in New York. It was about 1,700 miles away from me, and I bought a property actually using a credit card.
So there’s a lot of information. There’s an overload of information to do this stuff.
TAX LIEN CERTIFICATE STATES
A question I get asked is, “Are tax lien certificates available in every state?” A little less than half the states sell tax lien certificates.
Now, whenever people sell tax lien certificates, right away they think they’re going to get the property. You are not getting the property.
When you buy a tax lien certificate, you pay someone’s taxes, and guess what? Those people maintain possession. If they fail to pay the tax certificate, then you get possession.
WHERE TO BUY TAX LIENS AND TAX DEEDS
Here’s another question I get asked, “Is the only way I can buy these online through the county site, or are there other third-party sites where I can buy tax liens or tax deeds?”
The only place I know to buy tax lien certificates is from the county. However, the county may hire an outside auctioneer company.
If you wanted to call that a third-party, you could but that company only works for the county for a certain period of time. So while the auction for that county is taking place, they’re employed by the county.
MISTAKES TO AVOID AT ONLINE REAL ESTATE AUCTIONS
Now, this is important. What happens to people at an auction is they get very excited. If you’re excited, you’re going to do things that you normally wouldn’t do.
One of the things that you don’t want to do is to raise your hand or your bidding card and try and buy a property if you haven’t looked at the property.
You wouldn’t marry a woman if you hadn’t seen her, so don’t even think about buying a property if you haven’t seen it.
If you never had boots on the ground and eyes on the property, you don’t want to buy it. You just want to let that go by because you don’t know what could have happened.
There could have been a hurricane or a fire, or it might be next to a chicken farm. So that’s number one.
Number two is very similar. You get to the auction, and you’re excited. The bidding is going back and forth. You missed the one you wanted, so you get bidding on the next one.
Well, wait a minute, how can you bid on the next one unless you have an exit strategy?
What’s an exit strategy? It means you know what you’re going to sell it for.
You don’t want to buy a property if you don’t know what you’re going to sell it for. Because what will happen is you’ll bid, bid, bid, and you might win the auction.
It’s not important to win the auction. It’s important to get a great deal on the property. If you don’t know what you’re going to sell it for, you shouldn’t be buying it. So that’s what exit strategy is.
We hope you learned a lot today from Ted about online real estate auctions. It’s a convenient way to purchase properties at bargain prices anywhere in the United States from the comfort of your home.
First, you’ll want to subscribe to the services that promote online real estate auctions, which you can find on the website of the county where you want to buy. Then you will need to register for the auction.
Online real estate auctions can go slower than auctions that you attend in person because the bids are being taken by a computer rather than a human.
You can practice by attending a few online real estate auctions without buying, and just observing. It is better to take it slow and analyze how the process works and how other people bid before you jump in.
Before you place a bid at offline or online real estate auctions, it’s important that you know your exit strategy. In order to have an exit strategy, you need to do your research on the property before you buy it.
You need to know the condition of the property, how much it’s worth, and if the title is clear. You need to have seen the property and done your homework.
Ted can show you how to do all of this.
Ted Thomas has been in the Tax Defaulted Property Investment education business for over 30 years, and he can teach you all about offline and online real estate auctions.
Ted has developed a state-of-the-art training system that includes home-study courses and live intensive training workshops.
Plus Ted includes daily training webinars with experienced facilitators and weekly live Q&A group coaching sessions on Zoom with certified coaches. Ted Thomas has the complete training, guidance and support package.
Today Ted wants to give you a FREE course to give you a big head start. If you’d like to learn more about online real estate auctions, and you’re serious about it. Ted is serious about making it easy for you to begin.
Purchasing tax defaulted property at online real estate auctions can be very profitable, if you know what you’re doing, and you can start your education today by getting Ted’s Safe Haven Investor System (valued at $197) at no cost to you.
Safe Haven is 2 hours of streaming videos and a 100-page illustrated manual that teaches you all about tax liens & tax deed investing at both offline and online real estate auctions. Be sure to get your FREE Safe Haven course today.